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Short sellers shift focus on to retail shares

Short selling positions on retail shares have almost doubled between November and January, as investors bet on further doom and gloom for the sector, Capital Spreads has revealed.

The spread betting firm said that almost a quarter of all short positions are now allocated to retail shares.

Angus Campbell, the head of sales at Capital Spreads, said: "Of all short positions on UK equities at the beginning of November, 12 per cent was on retailers. By the middle of January this year this had almost doubled with 22 per cent of all short positions on UK equities being on retail stocks."

The spread betting firm’s client base shows that clothing shares are much more out of favour than the food retailers, citing Next, Marks & Spencer and Debenhams as being among the most heavily shorted retail stocks.

According to separate research from Dataexplorers.com, the fashion retailer Next is the most shorted stock in the FTSE 100.

At the close of trading on 19 January, 13.2 per cent of Next's shares was out on loan to short sellers – more than double the 5 per cent amount on 21 January 2008.

However, the most shorted stock in the FTSE 250 on 19 January was HMV, which has 22.78 per cent of its shares out on loan, compared to 30.25 per cent for the corresponding day last year, revealed Dataexplorers.com.

HMV is likely to benefit from the recent demise of two of its major competitors, Woolworths and Zavvi, and last week said it would enter the live music market via a joint venture with Mama Group.