Shortsellers target companies offering nice-to-haves in April, Hazeltree data shows

By Nell Mackenzie

LONDON, May 8 (Reuters) - Speculators in April bet stock prices would fall at companies where people spend their extra cash, believing that creeping recession risks might spook consumers, said a research report from Hazeltree on Thursday.

Luxury items, retailers and leisure-related companies saw large portions of their stocks borrowed for the purpose of shorting, according to the Hazeltree Shortside Crowdedness Report, which gathers data from 700 asset managers, covering 15,000 stocks globally.

A short seller borrows stock at a higher price betting its value will decline. Securities lending firms such as Hazeltree facilitate these trades.

Risks are high that the global economy will slip into recession this year, according to a majority of economists in a Reuters poll. U.S. President Donald Trump's tariff policy has heightened economic uncertainty, damaging business and consumer sentiment.

"Sticky inflation and a weak U.S. consumer already point to a potential economic slowdown. If tariffs worsen inflation, central banks may only have limited options to respond effectively," said a separate note on Thursday from Man Group's Adam Singleton, CIO of external alpha and solutions.

Top U.S. shorted stocks included credit card and auto loan company Capital One Financial Corporation COF.N, retailers Kohl's Corporation KSS.N and Foot Locker FL.N and concert ticket seller Live Nation Entertainment LYV.N.

Travel and leisure companies including MGM Resorts MGM.N and JetBlue JBLU.O and were also on the list.

European companies which gathered a high volume of short bets included luxury company LVMH LVMH.PA, food companies HelloFresh HFGG.DE and Delivery Hero DHER.DE and retailers H&M HMb.ST and Swatch Group UHR.S.

The companies did not immediately respond to a request for comment.

Given short-selling bans in many parts of Asia, most stocks that made Hazeltree's top shorted stocks were in Japan and Hong Kong where the practice is permitted.

Shorted stocks in the region included retailers ANTA Sports 2020.HK and Aeon Co 8267.T, e-retailer Mercari 4385.T and gaming company, Nintendo 7974.T.

Consumers are planning to cut back spending, a Morgan Stanley MS.N survey of 2,000 U.S. consumers published on Monday showed.

"We found that 42% (up from 35% last month) are planning to cut back, 19% (vs. 25%) are planning to spend more, while another 30% don’t anticipate any changes in spending," said the bank's report.

Survey respondents said cutting out meals on the town, would be their top way to save, the report noted.