HMV, the parent company of Waterstone’s and self-professed “top dog of music”, has become one of the most “shorted” UK stocks of all time, according to the Times. Almost 24% of HMV’s stock is now being borrowed as traders stake nearly 130m pounds on the chance that its share price is about to fall. Traders are thought to have sold 96.6m shares they do not own to buy them back later at a lower price. HMV’s share price has plummeted by 15% after profit warnings (brought on by the rapid decline in CD and DVD buying in favor of downloads) in the past three months and a disappointing Christmas, but experts say figures from Index Explorer show that the market believes the stock has still a long way to fall.
HMV’s share price rose a little when it emerged recently that Brandes Investment Partners, the value investor, had increased its stake in the music retailer. The American fund manager is now the group’s biggest shareholder with 40.8m shares, a 10.15% stake. Led by the secretive fund manager Amelia Morris, Brandes made hundreds of millions of pounds from investing in Marks & Spencer, having paid as little as 203p a share and sold for up to 700p a share. Brandes also owns stakes in Wm Morrison and French Connection.