How short sellers may have amplified WH Smith’s recent gains

When a company which is being targeted by short sellers unexpectedly announces good news, it can spark a big rally in the share price as these investors scramble to ‘cover’ their positions.

This additional buying pressure can lead to a bigger share price move than otherwise expected.

This was potentially evident with WH Smith recently after a well-received appointment to its board. We discuss this specific situation in more detail below. First, though, what is short selling?

What is shorting and how does it work?

Professional investors can make money from falling share prices as well as rising prices. They do this by borrowing stock from a third party with the aim of selling them and then buying them back later at a lower price.

This is far riskier than buying shares because it exposes the seller to potentially unlimited losses should the shares go up instead of down. There is also a cost of borrowing which needs to be factored in by the seller.

On top of that, there are potential margin calls from the broker needed to cover short-term losses. For all these reasons short selling is not suitable for most investors.

You can gain exposure to short selling by buying long/short hedge funds although you generally need to qualify as a ‘sophisticated investor’ depending on the legal structure of the fund.

Why it matters

While most retail investors are not permitted to short shares, knowing which companies are the most shorted can be valuable information.

As discussed, WH Smith is an example of this. It topped the mid-cap FTSE 250 index on 19 January, after the retailer named corporate turnaround specialist and ex-Balfour Beatty CEO Leo Quinn as executive chair, replacing Annette Court.

With the company looking to move on from an accounting error at its US division and a FCA (Financial Conduct Authority) investigation, investors see Quinn’s leadership as a springboard to rebuilding institutional trust.

Indeed, coinciding with the leadership announcement, regulatory filings showed that Morgan Stanley had increased its holding in WH Smith to more than 5%, further boosting market sentiment.

WH Smith shares are one of the most shorted shares in the UK market according to FCA data, with around 5% of the shares on loan, up 1.6% over the last month.

Are short sellers good or bad?

There is a misconception that short sellers spread lies to pull down the share price, so they financially benefit. While there are examples of short sellers who operate in this way, they are the exception rather than the rule.

Most short sellers perform an important market function by conducting in-depth research to identify struggling businesses. Occasionally, short sellers uncover potential frauds and inconsistencies in the accounts.

A high-profile example is UK construction firm Carillion which collapsed with £1.5 billion of debts in 2018. The failure triggered parliamentary enquiries into accounting practices and audit quality.

Which UK shares have seen a big increase in short interest?

The following table shows the companies with the largest increase in short interest, based on regulatory filings as of 19 January 2026.

International sales, marketing and support services group DCC has seen a near doubling of short interest over the last month.

The FTSE 100 company has been undergoing a strategic overhaul which involves divesting legacy businesses such as Healthcare and Technology to focus on its core Energy business.

The shares have struggled over the last year, falling by around fifth, driven in part by declining earnings forecasts. Analysts have revised down full-year earnings estimates to March 2026 by around 15% according to data provided by Stockopedia.

Food-on-the-go retailer Greggs is one of the most shorted shares in the UK market, with 12.6% of shares out on loan to short sellers.

It seems that sellers have doubled down on their negative bets following another poor year for the shares which have lost a quarter of their value.

The weakness followed a profit warning in 2025 as hot weather suppressed demand amid a slowdown in like-for-like sales growth. The company reiterated full year earnings guidance on 8 January when it revealed underlying 2.9% sales growth in the Christmas quarter.

However, the bakery chain, known for its sausage rolls, steak bakes and vegan alternatives, gave a cautious outlook for 2026, projecting flat profit due to subdued consumer confidence.