Large bets against Ocado despite talk of more deals

Ocado is still one of the most shorted stocks in London

Hedge funds are still ramping up bets against Ocado despite the online grocer finally stepping up its long-awaited international expansion.

Ahead of a trading statement on Thursday, hedge funds have continued to hold Ocado’s feet to the fire as its shares soared 52pc last week after it revealed a partnership with French retail giant Casino.

Ocado has been one of the most shorted stocks in London this year, and activist investor Crystal Amber also cranked up the pressure by taking out a stake in June and urging it to deliver a game-changing deal abroad.

Some 15.8pc of Ocado’s shares are still out on loan to short-sellers compared to 17.7pc before the deal was struck. While some hedge funds have tried to wind down their positions following the announcement, Discovery Capital Management and Parvus Asset Management have ramped up their bets against Ocado in recent weeks. Meanwhile, Altair Investment Management took out a large new short position on the day of the Casino deal. 

However, the FTSE 250 firm is expected to announce more deals abroad soon and hedge funds could be caught out if shares continue to climb. Prior to the Casino deal, rumours swirled around the City that Ocado was poised to reveal a partnership with Swedish firm ICA. A deal in America may also be on the cards. Ocado’s shares have been seen by the market “as something of a binary bet”, explained George Salmon, a Hargreaves Lansdown analyst. He added that Ocado will “prick up the ears of the bears, especially when the group has consistently traded on over 100 times expected earnings".