Short selling of Marks & Spencer shares soared to a record high as hedge funds placed a collective £800m bet on a slump in share price following the shock profit warning from rival John Lewis last week.
Short selling is the practice of borrowing shares of a company from an existing owner, selling those borrowed shares at the current market price and keeping the difference.
Figures from IHS Markit indicate almost 17% of M&S stock has been shorted against by public and private investors, of which 11.43% in publicly disclosed investments such as those of investment manager Blackrock Institutional Trust Company, which is the latest company to update its position against M&S.
The shorting follows from profit warnings across the high street including John Lewis and Debenhams. Short sellers are targeting retail chains such as M&S, Next and Debenhams in the belief that share prices will fall.
The high street retailer is currently reviewing its portfolio of in-house clothing brands, including Per Una, Autograph and Blue Harbour, in a bid to claw back dwindling fashion sales.
Currently ranked 98th in the FTSE 100 list of biggest British companies, a decline in M&S’s share price would leave the retailer at risk of demotion at the next quarterly review date in September.