Shortsellers bet against airlines and banks, Hazeltree report says

People Incorporated

11/09/2024 12:45

By Nell Mackenzie and Joanna Plucinska
       LONDON, Sept 11 (Reuters) - Shortsellers had their
sights on airlines in August, as pessimism towards a sector
plagued by earnings declines and price rises grows, a report by
data and tech firm Hazeltree on Wednesday showed.
    American Airlines Group  AAL.O , JetBlue  JBLU.O , Wizz Air
 WIZZ.L  and British Airways owner International Consolidated
Airlines Group  IAC.O  all ranked in the top most crowded spots
in the Hazeltree Shortside Crowdedness Report. Hazeltree
compiles the report based on stock borrowing data globally from
about 700 asset management funds.
    To bet on a falling stock price, traders borrow the shares
at a higher value to profit once they buy them back at a cheaper
price. The more 'crowded' a short bet, the higher percentage of
funds that are shorting it, according to the Hazeltree report. 
    American Airlines took the top most crowded short for U.S.
mid-cap stocks, the Hazeltree data showed, while JetBlue came in
eighth of the U.S. small-cap stocks. 
    In Europe, British Airways' owner came in seventh for
large-cap stocks and Wizz Air hit the top most crowded ranking
for small-cap stocks, said the report. 
    American Airlines, JetBlue, Wizz Air, and International
Consolidated Airlines Group did not immediately respond to an
emailed request for comment. 
    European airline stocks have struggled this year as carriers
have faced a limited supply of new planes and rising labour
costs. 
    Some investors and analysts say the airline industry, which
is cyclical and closely tied to macroeconomic trends, could be
facing another downturn as post-COVID travel demand stabilizes
and consumers become more price sensitive. 
    Wizz Air has been noted by analysts as one of the market's
worst performers as it faces engine checks, grounding a number
of its Airbus fleet, and challenges tied to conflict in the
Middle East and Ukraine impacting its routes. 
    Traders also took bets against banks during August, said the
Hazeltree report, with Goldman Sachs  GS.N  the ninth most
crowded U.S. large cap stock for shortsellers. 
    Goldman Sachs declined to comment. 
    A range of speculators take short bets from active asset
managers to hedge funds. 
    While hedge funds were equally long and short on sectors
such as industrials which includes airlines, they were short
banks in August, according to a separate report by Morgan
Stanley's prime brokerage which serves hedge funds. 
    European banks and insurance companies were one of the most
net sold stock sectors in August, showed the Morgan Stanley
report dated Sept. 5 and seen by Reuters on Wednesday.  
    Hedge funds sold stocks globally in August "amidst continued
macro uncertainty and market volatility," said the Morgan
Stanley report.  

 (Reporting by Nell Mackenzie Joanna Plucinska, editing by Dhara
Ranasinghe and Alexandra Hudson)
 ((Nell.Mackenzie@thomsonreuters.com; https://twitter.com/nellmooney;))