JPMorgan has gone bearish on nine FTSE 250 stocks, betting big money against them.
The bank’s decision to short these nine stocks could trigger big shareholders to re-evaluate their positions.
Short-selling involves borrowing shares to sell them in the market, with the goal of repurchasing them at a lower price.
Watch out below
The Financial Conduct Authority (FCA) makes funds disclose their net short positions once they meet or exceed 0.5% of a company’s issued share capital.
A disclosure from 14 December shows JPMorgan has shorted nine stocks in the FTSE 250 index.
Company Name
% of share capital shorted as at 14 December 2023
FD Technologies
1.13
Vertu Motors
0.75
Supermarket Income REIT
0.61
Renishaw
0.60
Primary Health Properties
0.60
Pennon Group
0.55
ME Group International
0.54
The Gym Group
0.54
Essentra
0.52
Financial Conduct Authority disclosures, as at 14 December 2023
JPMorgan’s most heavily shorted stock is FD Technologies, a data solutions provider. In second place is Vertu Motors, an automotive dealership group. In third position is Supermarket Income REIT, an investment trust focusing on supermarket real estate.
Worryingly, I have a sizeable position in my own portfolio of Primary Health Properties, a REIT that owns clinics in the UK and Ireland. JPMorgan is currently selling 0.6% of this particular REIT’s share capital short. Should I sell before it’s too late?
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
Different strokes for different folks
I invested more than 10% of my portfolio in Primary Health Properties in early 2023. I made that move because I believe ageing demographics in the UK will cause demand for health services to skyrocket. It also sweetened the deal that the REIT was trading at a beaten-down price with a chunky dividend yield of 6.7%. I was left impressed by the fact the company has a 26-year streak in year-on-year dividend growth.
Traders at JPMorgan clearly don’t share my enthusiasm. Given Supermarket Income REIT is also on the list of most-shorted stocks, it could reflect in part pessimism towards the UK property market more generally. Indeed, the Bank of England might shock investors by raising interest rates again. In that case, UK REITs like Primary Healthcare Properties could experience a vicious bear market.
Comfortingly, I’m not alone in my optimism for UK REITs. Morgan Stanley called UK property stocks “compelling” in a research note back in October.
And, not to jinx it, but I’m pleased to report that – so far – most of JPMorgan’s shorts are in the red. Below are the nine shorted stocks along with their price changes since the position was opened.
Company Name
Short position opened
Price change since short was opened (to 14 December 2023)
Essentra
16-Nov-23
0.3%
FD Technologies
05-Dec-23
8.6%
ME Group International
08-Dec-23
-0.4%
Pennon Group
21-Aug-23
19.63%
Primary Health Properties
13-Oct-23
14.2%
Renishaw
07-Dec-23
0%
Supermarket Income REIT
21-Jun-23
8.8%
The Gym Group
19-May-23
0%
Financial Conduct Authority disclosures, as at 14 December 2023; price data from Yahoo Finance
Five of the nine positions have increased in price, the opposite of what JPMorgan had hoped. Two have flat-lined. One (ME Group International) has nudged down by -0.4%.
To conclude, I’ll be holding onto my shares in Primary Health Properties. I like the company’s financials and track record. I think it’s well positioned to ride some powerful demographic tailwinds over the next decade and beyond.
The post A bearish forecast: JPMorgan’s list of nine FTSE 250 stocks to avoid appeared first on The Motley Fool UK.
Pound coins for sale — 51 pence?
This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!
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See the full investment case
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Mark Tovey has positions in Primary Health Properties Plc. The Motley Fool UK has recommended Primary Health Properties Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
