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Hedge funds bet that shares in Shell and Sainsbury’s will fall further as both firms suffer disastrous starts to 2016

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By City & Finance Reporter for the Daily Mail: 22 JAN 2016

Hedge funds are taking bets that shares in Royal Dutch Shell and Sainsbury’s will fall further.

Shell, which is down nearly 15 per cent so far this year and is hoping to buy gas giant BG Group in a £36billion deal next month, has around 5 per cent of its shares out on loan.

Investors are ‘shorting’ its shares – borrowing shares and selling them with a view to buying them back at a lower price in future.

According to financial research firm Markit, £2.6billion of short positions have been registered in Shell, which means short interest now stands at a record high for the energy firm.

Supermarket Sainsbury’s – expected to make a second approach for Argos owner Home Retail Group – is the most shorted stock in the FTSE 100. Sainsbury’s shares are down more than 9pc this year.

Markit has found many funds shorting stocks are under the radar. Only those with positions above 0.5 per cent must declare.

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