Short monitor- single biggest short in UK history

Published on 12-12-2019 08:36:15

 


 


Source: Company accounts and Edison Investment Research

Source: Company accounts and Edison Investment Research


Premier Oil (PMO) is the most shorted stock in the UK, appearing in the top most shorted list for the first time since September. Hong Kong hedge fund Asia Research and Capital Management (ARCM) took a 17% short position in Premier in July, but did not disclose this to the Financial Conduct Authority until Friday 6 December. ARCM’s short position in Premier is worth c £130m, making it the biggest short in UK history. The hedge fund’s short position is most likely a hedge against its debt holding in Premier, as investors have been cautious of debt piles of struggling oil companies, including peers such as Tullow. Currently, Premier’s LTM net debt is $2.4bn, representing a 2.5x net debt to EBITDA ratio and a 33% increase from FY18. Notably, Royal Mail is no longer included on the top most shorted stocks list after winning its court injunction to stop postal strikes over the Christmas period.

The total number of shorts reached 237 in November, representing a 25% increase from the start of the year and a 36% increase from April (the lowest point in 2019). That said, despite the growth in shorting activity, the FTSE 350 has climbed c 10% since January, going against the typical inverse relationship between index performance and number of shorts. With Brexit and election uncertainties on the horizon, it seems investors are remaining cautious over the future of UK equities.

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