Downing tools: Investors pile into bets against B&Q owner as DIY boom slows
The troubled owner of retailer B&Q has become the most shorted stock on the London Stock Exchange as two top investors revealed hefty bets against the firm this week.
Kingfisher, which also counts Screwfix and French firm Castorama among its brands, now has 7.82 per cent of its shares held in short positions after hedge fund Marshall Wallace and BlackRock Investment Managers piled into positions against the stock, according to FCA data analysed by City A.M.
Marshall Wallace became the latest investor to take a position against the firm on Tuesday with 2.1 per cent of its stock held short, while BlackRock revealed it was holding 1.8 per cent of the stock short last Friday.
Investors are wagering that Kingfisher’s share price will continue to slide after it has tumbled over 28 per cent in the past year as consumers tighten the purse strings and a pandemic-induced boom in sales drops off.
The bets come after analysts at UBS slapped a sell rating on the stock on Friday and slashed its target price to 203p from 338p, blaming weak industry data and tightening competition.
Kingfisher was among a crop of firms that was boosted by the pandemic as housebound Brits turned to DIY through lockdowns. But UK sales at the retailer fell 14.2 per cent in the three months to the end of April, and bosses are set to update the City on whether sales continued to tumble in the second quarter on 20th September.
Analysts at Hargreaves Lansdown that investor patience was wearing thin as it became clear the pandemic DIY boom was more “fad” than long term trend.
“There are now signs that the number of amateur builders, painters and carpenters hanging up their tool kits is growing, as belts are tightened amid the cost-of-living crisis,” Susannah Streeter, senior investment and markets analyst, told City A.M.
Streeter said the latest results from rival Wickes had “set the scene for a continued slowdown in the DIY craze” as budding builders steer clear of rising costs in timber and raw materials.
Kingfisher declined to comment.