Hedgies circle Sports Direct: Short sellers scramble to bet on troubles

 
Oliver Gill
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Mike Ashley (centre) is the largest shareholder in Sports Direct (Source: Getty)

Hedge funds are betting on bad news as Sports Direct announces it preliminary full-year figures tomorrow.

In the last week there has been a spike in stock loaned to those seeking to short shares in the sportswear giant.

More than nine per cent of the shares are on loan, compared with a historical norm nearer five per cent, according to IHS Markit. Hedge funds have scrambled to loan Sports Direct shares, with 90 per cent of those available to be used on loan to institutions betting against the firm.

Read more: Sports Direct profits to plunge as margins shrink

However, one City analyst told City A.M.:

It is brave move as it’s not impossible Sports Direct gets taken private. That would be a nasty experience for the shorts.

Sports Direct is set to reveal its lowest profits for six years this week, with founder and major shareholder Mike Ashley grappling to convince investors of his "Selfridges of Sport" ambitions for the company.

Sports Direct has been approached for comment.

Read more: Sports Direct’s Mike Ashley buys Game Digital stake after profit warning

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