Shares in Hammerson, one of the UK’s largest mall giants, have suffered a significant decline in recent months, reflecting growing concerns about the future of the retail property sector. The company’s shares are currently trading at just over 158p, down from 308p at the beginning of the year and 240p just a month ago. As a result, Hammerson’s market value has dropped to £1.21 billion.
However, examining the share price alone does not provide the full picture. A closer look reveals that faith in the malls property sector is diminishing, as the number of Hammerson shares being borrowed and sold by short-sellers has reached unprecedented levels. Short-selling involves investors borrowing shares and selling them at the current market price. If the share price continues to decline, short-sellers can make a profit. Conversely, if the share price rises, they may face significant losses. The surge in shorting activity surrounding Hammerson’s shares indicates a lack of confidence in the company and its future prospects.
This troubling trend is particularly worrisome as it coincides with the struggles faced by Hammerson’s competitor, Intu, which is teetering on the edge of collapse. Other companies within the sector, such as NewRiver and British Land, have also experienced an uptick in shorting activity. This further emphasizes the prevailing lack of confidence in mall giants.
Data from IHS Market recently revealed a peak in short-selling activity on Hammerson shares. The number of shares on loan has increased to over 17%, compared to 12% at the beginning of January. This suggests that more and more short-sellers are betting against the success of the company.
Despite these challenges, some of Hammerson’s largest shareholders are using the declining share price as an opportunity to increase their stakes in the firm. This indicates their belief in Hammerson’s potential for a turnaround and suggests they have confidence in its long-term prospects.
In conclusion, the drop in Hammerson’s share price, coupled with the increasing prevalence of short-selling, reflects a prevailing lack of confidence in both the company itself and the wider retail property sector. While a portion of shareholders remains hopeful about Hammerson’s future, the overall outlook for mall giants remains uncertain. The difficulties faced by Intu and the rise in shorting activity among similar companies indicate tough times ahead.