In spread betting it’s possible to short a stock, effectively meaning you are borrowing shares and selling them with the hope of buying them back a cheaper price later. It’s a favourite tactic of hedge funds too and that can mean some fairly large short positions can be accumulated in a company’s stock.

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Here we look at the five most heavily shorted FTSE stocks. The data comes from the FCA’s daily short positions report, via Castellain Capital’s Short Interest Tracker. This details the percentage of a company’s shares that are held ‘short’ and was accurate at time of publication.

Carillion

24.44% short

A multinational facilities management and construction services company, Carillion suffered a steep sell-off in the wake of the Brexit vote and continued lower since. Last year total revenue grew 14% to £5.21bn, but pre-tax profit fell 5% to £146.7m. Years of lacklustre growth and weak margins have left traders bearish on the cyclical builder.

Ocado Group

17.62% short

A much-hyped international deal has yet to materialise as this pick-and-pack grocery merchant trades at tech company multiples of around 130 times trailing 12-month earnings.

Sales climbed at a rate of 13.1% in the 13 weeks to the end of February – the same level of growth seen throughout 2016. In a tough market this is no mean feat and Ocado continues to grow ahead of the online grocery market and well ahead of the market overall. But profits remain unlikely to suddenly improve (a puny £14.5m on £1.271bn in revenues last year), without the much-hyped international deal.

If Ocado lacks the muscle to expand on its own, it could become a takeover target itself, especially given the current climate for deal-making in the City. The likes of Wal-Mart-owned Asda or Amazon could be interested.

Wm Morrison Supermarkets

16.89% short

Falling margins after more than 2 years of a bitter supermarket price war and store price deflation has left investors sceptical about the upside for Morrisons. A turnaround strategy under CEO Dave Potts is yielding results, with sales and profits rising.

But investors are still uncertain as worries about declining basket sizes, fading consumer spending health and margin pressure weigh.

Tullow Oil

15.34% short

Tullow has been punished after taking a few too many risks but a turnaround is in progress. Net debt is high – more than 5 times its preferred gauge of earnings. The lack of discipline has seen its shares crash by 90% from their 2012 peak. Oil at $50 a barrel is better news but the market looks sceptical. Operating profit is expected to swing back into profit.

Mitie Group

14.70% short

Selling off its troubled social care arm for £2 was a sign of the problems that Mitie has faced. In January the firm cut its profits forecast for the year to between £60-70m after identifying an additional £14m in one-off charges in the year. That makes it three profits warnings in just 5 months.

In November it reported a first half loss of £100m and warned of further one-off closure costs and losses on disposals as it exits the loss-making home healthcare market. It’s been hit by rising staff wages as well “significant macroeconomic challenges” which are translating into clients delaying investment and spending.

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