Argos owner hit by short selling as hedgies bet against retailers

HEDGE funds are continuing to make large bets against the health of the retail sector, with more than a fifth of the shares in Argos owner Home Retail Group currently out on loan.

Figures supplied to City A.M. by data provider Markit show online supermarket Ocado and electronics firm Dixons are also being hit by short sellers.

Short selling involves borrowing shares from a broker in the hope that a company’s share price will fall. If the price does indeed drop then the traders can buy back the shares at a lower price and profit from the difference.

Hedge funds making bets against the long-term prospects of Home Retail Group – which also owns DIY chain Homebase – include BlackRock Investment Management and Newbrook Capital Advisors, according to figures disclosed by the Financial Services Authority.

Over the last month there has also been a large increase in the short selling of shares in commodities trader Glencore, haulage firm Stobart and Premier Foods. All saw the number of shares out on loan increase by a third over the period.

However short-sellers have cut their interest in newsagent WH Smith by 10 per cent over the last month after the company’s shares rallied.

The amount of short-selling across the wider FTSE All-Share index remains low at only 1.4 per cent.