Short sellers switch retail focus after Ocado share price soars

Ocado’s shares are up 43% since the Morrisons deal

The portion of Ocado’s stock out on loan to short-sellers continues to fall following the dramatic rise in its share price.

The percentage of Ocado’s stock on loan fell from a FTSE-All Share high of 18% last October to just 3.0% as The Grocer went to press [Markit], after Ocado’s shares rocketed from less than 70p in October 2012 to a high of 343p last month.

Short sellers had hoped to profit from a further fall in Ocado’s share price amid rumours it was running out of cash. But an agreement to help Morrisons launch an online service has contributed to a dramatic turnaround, and short-sellers have closed or reduced short positions to minimise losses.

The value of Ocado’s shares has also convinced co-founder and commercial director Jason Gissing to sell shares for the first time since the IPO. Last Friday, he sold 5.6% of his stake for £3.3m.

In contrast, shorts on Morrisons stock have increased, to 5.27% as The Grocer went to press. The most heavily shorted retail stock is now WH Smith at 13.97%.