LONDON, Sept 11 (Askume) – Short sellers turned their sights on airlines in August amid growing pessimism in the industry, which is plagued by falling earnings and rising costs, data and technology firm Hazeltree reported on Wednesday.
American Airlines Group (AAL.O) , JetBlue Airways (JBLU.O) , Wizz Air (WIZZ.L) and British Airways parent company International Consolidated Airlines Group (IAC.O) are ranked among the most crowded companies in the Hazeltree Shortside Report on the Most Crowded Destinations. Hazeltree compiled the report based on stock lending data from nearly 700 asset management funds around the world.
To bet on a stock’s price falling, traders borrow shares at a higher price and then buy them back at a cheaper price to make a profit. The more “crowded” a short trade is, the greater the proportion of funds shorting the trade, according to the Hazeltree report.
Hazeltree data shows American Airlines ranks top among U.S. mid-cap stocks, while JetBlue ranks eighth among U.S. small-cap stocks.
In Europe, the owner of British Airways ranks seventh among large-cap stocks, while Wizz Air is one of the most crowded stocks among small-cap stocks, the report said.
American Airlines, JetBlue Airways, Wizz Air and International United Airlines Group did not immediately respond to emailed requests for comment.
European airline stocks have underperformed this year due to limited supply of new aircraft and rising labor costs.
Some investors and analysts say the airline industry, which is cyclical and closely tied to macroeconomic trends, could face another recession as travel demand stagnates after the coronavirus pandemic and consumers become more price-sensitive.
Analysts have described Wizz Air as one of the worst-performing airlines in the market due to engine inspections, the grounding of much of its Airbus fleet and challenges on its routes caused by conflicts in the Middle East and Ukraine.
Traders also shorted bank stocks in August, with Goldman Sachs (GS.N) the ninth most crowded U.S. large-cap stock among short sellers, Hazeltree reported.
Goldman Sachs declined to comment.
Speculators of all types, from active asset managers to hedge funds, are placing short bets.
Hedge funds were equally long and short on industrial sectors, including airlines, while shorting banks in August, according to a separate report from Morgan Stanley, a major brokerage firm that serves hedge funds.
A September 5 Morgan Stanley report seen by Askume on Wednesday showed European banks and insurance companies were among the biggest net selling equity sectors in August.
Morgan Stanley reported that hedge funds sold stocks globally in August “amid widespread uncertainty and market volatility.”
