Short-sellers bet Hargreaves Lansdown shares have further to fall despite slump
Investors are betting that Hargreaves Lansdown’s share price will fall further despite losing a tenth of its value in the past week.
Short-seller interest in bets against Britain’s largest stock broker remains near record levels, latest figures show.
Nearly 12pc of Hargreaves Lansdown’s outstanding shares were on loan from investors on Friday, according to data from S&P Global Market Intelligence.
Funds betting against the investment platform include the UK division of BlackRock, the world’s largest asset manager, plus Point72, the hedge fund run by Wall Street billionaire Steve Cohen.
Short sellers borrow shares and sell them on the market, betting they can buy them back at a later date at a cheaper price.
If the share price falls, short sellers pocket the difference when they return the shares to their original owner.
The increased shorts against Hargreaves Lansdown suggest that investors believe shares in the wealth manager will further decline.
Hargreaves Lansdown’s shares have dropped nearly 10pc in the past week after warning that tough market conditions could harm investor confidence this year.
Pre-tax profits declined 8pc to £183m in the half-year ending December 2023.
The Bristol-based business blamed the drop on higher costs, including increased investment on technology and staff.
Spending on data, analytics and AI software rose from £23.4m to £24.7m last year.
While mega hedge fund Citadel slightly reduced its wager in response to the poorly received results, British hedge fund Marshall Wallace and US rival Millennium International Management raised their bets.
Hargreaves Lansdown, founded in 1981, has grown to become the UK’s largest DIY investment platform.
The broker helped to bring stock market investing to the masses by making it easier for savers to buy and sell shares and funds without the need for financial advisors.
However, bets have ramped up against Hargreaves Lansdown in the past six months as the company faces pressure to upgrade its technology systems and reduce fees amid rising competition from rivals, including AJ Bell and Interactive Investor.
Platforms have also faced pressure to pay investors higher rates on cash deposits because of soaring interest rates amid a regulator crackdown on those failing to deliver customers “fair value”.
The Financial Conduct Authority last year piled pressure on investment firms by asking for details on how much they earn from customers’ cash deposits.
Hargreaves Lansdown’s shares have lost nearly 60pc of their value over the past five years. The company was relegated from the FTSE 100 after 12 years in the blue-chip index.
