Frasers Group ups direct stake in ASOS as 'short sellers' bet on share price falling

By

Nigel TAYLOR

Published
Nov 21, 2023

Frasers Group has been simultaneously increasing and lowering its interest in ASOS, and more of the same has happened this week.

It has just increased its equity interest in the business — that is, the shares it holds directly — from 12.7% to 16.4%, but its overall holding has dropped to 18.3% from 19.5% and it also has interests held in financial instruments, which is what has declined.

The fact that its direct share purchases have increased may be significant and the stock was up just over 1% on Tuesday.

However, while Frasers is clearly keen to hold a big stake in the business, lots of other share activity is from so-called short sellers — those who are betting the share price will fall further.

You know if a stock market-listed business is struggling when investors gather to bet on that price falling. And a total of nine investment firms are now holding positions against the online fashion retailer.

Short sellers have been circling the beleaguered digital retailer for months but ASOS has now widened its lead as the most shorted pick on the London Stock Exchange. In all, 7.61% of its stock is now held by short investors, according to filings from the Financial Conduct Authority and seen by City AM.

The latest bets against ASOS come from SIH Partners, which opened a position against the company on 16 November, while Arrowsmith holds the largest bet against the company, making up a total of 1.31% of its total issued share capital.

This all underscores the troubles facing ASOS after a collapse in its value over the past year. Its shares have fallen nearly  80% since February last year. And short seller interest intensified after Asos issued another profit warning to the market in early November.

Earlier this year, chief executive José Antonio Ramos Calamonte announced a range of cost-cutting initiatives to reverse its fortunes, aiming to reduce the £1.1 billion worth of stock it holds and cut down on its warehouse space.