Short selling returns to the UK
26 March 2026 UK
Image: 喔權复喔ㄠ福喔瞋喔箞喔о浮喙�喔佮复喔�/stock.adobe.com
New analysis of publicly disclosed UK Financial Conduct Authority (FCA) net short positions by global law firm White & Case reveals that short selling has returned to the UK market strongly.
According to the firm, three UK-listed companies have net short positions of more than 10 per cent as of 23 March 2026, compared with none at any point in 2025.
Additionally, 20 UK-listed companies have net short positions of more than five per cent, as of 23 March 2026, compared with just two at any point in 2025.
Among these 20 companies, the consumer sector appears to be the most heavily shorted.
The analysis comes amid recent high-profile short selling activity. Viceroy Research published a note on Close Brothers arguing that the specialist lender had not set aside enough money to cover potential liabilities from the car finance scandal, while Wizz Air was targeted by short sellers after warning that it would be impacted by the Iran conflict.
Patrick Sarch, head of UK Public M&A at White & Case, says: 鈥淥nly when the tide goes out do you discover who's not wearing shorts 鈥� and indeed who is being shorted.
鈥淲e predicted at the end of 2025 that 2026 would see a significant increase in shorting shares in UK companies and this research vindicates that prediction.
鈥淭he opportunities for short sellers are more attractive now than they have been for many years.
鈥淕lobal stock markets have experienced a relatively long decade-plus bull market with strengthening equity valuations, and although the UK remains more moderately priced relative to other markets, UK stocks had been at record highs until the recent geopolitical tensions in the Middle East and were not generally undervalued relative to each other.
鈥淗owever, markets are beginning to come off these highs following the recent reallocation out of AI-driven stocks and heightened macro uncertainty.
鈥淎s individual valuations come under pressure, investors are increasingly taking a closer look at those UK-listed companies whose equity stories appear too good to be true and whose fundamentals don鈥檛 support their valuations.
鈥淒espite this recent uptick in short-selling activity, short-selling has always played a healthy role in capital markets, supporting price discovery, liquidity, transparency, good governance, and market discipline.
鈥淪hort-sellers are often sophisticated investors who produce extensive and well-researched theses on companies, and many have played a crucial role in exposing fraud at companies such as Wirecard and Home REIT.鈥�
White & Case LLP states that the best way to prevent becoming vulnerable is to be proactive and transparent. A number of potentially vulnerable companies have an internal investor engagement or audit committee that meets quarterly to review and assess vulnerabilities and risks, including accounting policies, revenue recognition, provisions, disclosure, related party issues, and undisclosed vulnerabilities.
They note that the investor engagement function should serve as the harshest internal critic, regularly challenging boards and management teams and relaying feedback from the market.
Issuers should also demonstrate strong governance and transparency and seek investor and analyst views on strengths and weaknesses.
The firm states it is often possible to anticipate issues which a short-seller may focus on, and the most effective prevention is for the company to drive the narrative by consistently and proactively explaining its 鈥渆quity story鈥� or value proposition to investors, supported by objective evidence where possible, and to be honest and transparent about its weaknesses and risks.
When the market first hears about negative news or misunderstood liabilities from a bear attacker, the company is on the back foot and may be in trouble, with trust in management and the board鈥檚 oversight being immediately lost and can be very hard to regain, while the share price is impacted and the stock is negatively rerated until there is a strong basis for rehabilitation.
According to the firm, companies should work with advisers to prepare a short-selling defence manual that includes key details of who responds, how, when, and with what evidence, and scenario planning for the most foreseeable attacks.
They further note it is crucial to rehearse these defence plans so people know what to do in the first minute and hour in the event of an attack 鈥� which may be combined with other events, such as a cyber-attack, profit warning, C-suite succession issue, or a relevant market disruption.
Issuers should also be ready to commission independent reviews 鈥� accounting, legal, and forensic 鈥� and engage regulators if manipulation is suspected.
According to the firm, three UK-listed companies have net short positions of more than 10 per cent as of 23 March 2026, compared with none at any point in 2025.
Additionally, 20 UK-listed companies have net short positions of more than five per cent, as of 23 March 2026, compared with just two at any point in 2025.
Among these 20 companies, the consumer sector appears to be the most heavily shorted.
The analysis comes amid recent high-profile short selling activity. Viceroy Research published a note on Close Brothers arguing that the specialist lender had not set aside enough money to cover potential liabilities from the car finance scandal, while Wizz Air was targeted by short sellers after warning that it would be impacted by the Iran conflict.
Patrick Sarch, head of UK Public M&A at White & Case, says: 鈥淥nly when the tide goes out do you discover who's not wearing shorts 鈥� and indeed who is being shorted.
鈥淲e predicted at the end of 2025 that 2026 would see a significant increase in shorting shares in UK companies and this research vindicates that prediction.
鈥淭he opportunities for short sellers are more attractive now than they have been for many years.
鈥淕lobal stock markets have experienced a relatively long decade-plus bull market with strengthening equity valuations, and although the UK remains more moderately priced relative to other markets, UK stocks had been at record highs until the recent geopolitical tensions in the Middle East and were not generally undervalued relative to each other.
鈥淗owever, markets are beginning to come off these highs following the recent reallocation out of AI-driven stocks and heightened macro uncertainty.
鈥淎s individual valuations come under pressure, investors are increasingly taking a closer look at those UK-listed companies whose equity stories appear too good to be true and whose fundamentals don鈥檛 support their valuations.
鈥淒espite this recent uptick in short-selling activity, short-selling has always played a healthy role in capital markets, supporting price discovery, liquidity, transparency, good governance, and market discipline.
鈥淪hort-sellers are often sophisticated investors who produce extensive and well-researched theses on companies, and many have played a crucial role in exposing fraud at companies such as Wirecard and Home REIT.鈥�
White & Case LLP states that the best way to prevent becoming vulnerable is to be proactive and transparent. A number of potentially vulnerable companies have an internal investor engagement or audit committee that meets quarterly to review and assess vulnerabilities and risks, including accounting policies, revenue recognition, provisions, disclosure, related party issues, and undisclosed vulnerabilities.
They note that the investor engagement function should serve as the harshest internal critic, regularly challenging boards and management teams and relaying feedback from the market.
Issuers should also demonstrate strong governance and transparency and seek investor and analyst views on strengths and weaknesses.
The firm states it is often possible to anticipate issues which a short-seller may focus on, and the most effective prevention is for the company to drive the narrative by consistently and proactively explaining its 鈥渆quity story鈥� or value proposition to investors, supported by objective evidence where possible, and to be honest and transparent about its weaknesses and risks.
When the market first hears about negative news or misunderstood liabilities from a bear attacker, the company is on the back foot and may be in trouble, with trust in management and the board鈥檚 oversight being immediately lost and can be very hard to regain, while the share price is impacted and the stock is negatively rerated until there is a strong basis for rehabilitation.
According to the firm, companies should work with advisers to prepare a short-selling defence manual that includes key details of who responds, how, when, and with what evidence, and scenario planning for the most foreseeable attacks.
They further note it is crucial to rehearse these defence plans so people know what to do in the first minute and hour in the event of an attack 鈥� which may be combined with other events, such as a cyber-attack, profit warning, C-suite succession issue, or a relevant market disruption.
Issuers should also be ready to commission independent reviews 鈥� accounting, legal, and forensic 鈥� and engage regulators if manipulation is suspected.
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