Hedge funds globally continued to sell European stocks for the second consecutive week, concentrating on financial, materials, energy, and industrial sectors. Data from Goldman Sachs for the week ending March 21 revealed a significant focus on short positions rather than long ones in four out of the last five weeks. These short bets were primarily driven by single-stock selections rather than broader market indices. Key markets impacted include Germany, Italy, the Netherlands, Denmark, and the UK.

Nine out of eleven stock sectors experienced net selling during this period, with companies in the building and construction materials sector being particularly affected. Additionally, crowded short positions in February involved asset manager Schroders and home improvement company Kingfisher. Recent regulatory disclosures indicate increased betting against these firms in March, involving notable hedge funds such as AKO Capital, Man Group, Kintbury Capital, and Marshall Wace. Energy firm Petrofac also featured prominently due to substantial short positions held by Helikon Investments and TFG Asset Management.

Short Positions Targeting Specific Sectors and Companies

The recent trends reveal that hedge funds are increasingly targeting specific sectors within Europe's stock markets. The data indicates a preference for short positions over long ones, focusing on particular industries like financials, materials, and energy. This strategic move reflects an anticipation of declining values in these areas. Germany, Italy, the Netherlands, Denmark, and the UK have seen the most significant impact, with numerous stocks being sold off based on individual assessments rather than index-based strategies.

In detail, nine out of eleven sectors witnessed net selling, with companies specializing in building and construction materials bearing the brunt. Financial institutions too have not been spared. Reports suggest that hedge funds have intensified their short positions against certain entities since February. For instance, asset manager Schroders and home improvement giant Kingfisher faced heightened scrutiny and betting activity. Regulatory filings further confirm ongoing interest in these targets, reinforcing the trend of selective short-selling among hedge funds operating in Europe.

Notable Firms Facing Increased Betting Activity

Beyond general sectoral trends, several prominent European firms have become focal points for hedge fund activities. Among them are Schroders, Kingfisher, and Petrofac, all experiencing heightened levels of short betting activity recently. These firms represent different industries yet share commonality in attracting attention from major players in the hedge fund community. Disclosures from the UK’s Financial Conduct Authority highlight key participants such as AKO Capital, Man Group, Kintbury Capital, and Marshall Wace actively engaging in bets against Kingfisher.

Petrofac stands out as the UK-listed company with the largest proportion of short positions relative to its outstanding shares, attributed mainly to holdings by Helikon Investments and TFG Asset Management. Despite these developments, responses from affected parties remain limited; Kingfisher and Petrofac declined commenting, while Schroders did not respond to inquiries. Meanwhile, among the hedge funds involved, Man Group and Marshall Wace chose not to comment, whereas requests sent to AKO Capital, Helikon Investments, TFG Asset Management, and Kintbury Capital awaited replies. This scenario underscores the complex interplay between corporate entities and financial actors navigating volatile market conditions.