The British online supermarket was FIS’s top pick for a second consecutive week as part of its hot stocks list for Europe, the Middle East, and Africa, as short interest volume fell 22 percent in the third week of November.
“Such changes can precede an upward movement in the value of company shares as short sellers seek to minimise their exposure, but the drop was not followed by a correlated drop in utilisation, suggesting that some large institutional funds were also selling out of Ocado as the shares fell to £2.39—within a few pence of a new 12-month low,” FIS explained.
Last week saw a further 7 percent drop in short interest with utilisation falling almost twice as fast.
According to FIS, this suggests that short sellers and long investors were both expecting a positive event, which in this case was signing of a deal with Groupe Casino of France, a major European supermarket.
Ocardo’s share price has since rebounded, closing the week up 52 percent to sit at £3.64, a new 24-month high.
“Not everyone appears to be convinced, however, as 68 percent of the available shares remain borrowed by short sellers,” FIS added.