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Good stock-picking isn’t just about knowing which companies are worth backing; it’s also about knowing which to avoid. With the latter in mind, I’ve been looking at three UK shares that are, as I type, some of the most popular among short-sellers — traders betting their prices will go down.
Sales crumble
To some extent, the hate for Domino’s Pizza (LSE: DOM) is understandable. Investors have lost their appetite for the FTSE 250 member in recent times as the cost-of-living crisis has changed consumer behaviour and, consequently, impacted earnings. Only this month, management warned that full-year profit would come in lower than previously expected, not helped by higher staffing costs.
If there’s a silver lining to this cloud, it’s that rivals like Pizza Hut are also feeling the pain and closing sites for good. This could work in Domino’s favour if/when the good times return.
The stock changes hands on a price-to-earnings (P/E) ratio of 11 as well — arguably cheap given the high operating margins posted year after year. The 5.6% dividend yield is similarly attractive and, while never guaranteed, should be covered by expected profit.
The sizzling UK weather is unlikely to have been good for sales. But the inevitable arrival of colder days might mean brave contrarians will want to consider this one.
Sinking share price
Also on the list of most shorted UK shares is AIM-listed Ashtead Technology Holdings (LSE: AT.). Again, this isn’t all that surprising. The value of the company — which provides subsea technology solutions to the global offshore energy sector — has fallen by a little over 40% in 2025 alone.
Ashtead has faced a number of issues, including geopolitical pressures and “significant disruption in the US market“. In July, it stated that full-year adjusted earnings would now come in “modestly below” its previous estimate. It looks like some traders believe the actual result could be even worse than feared.
Despite the awful recent form, this company has still more than doubled in value since 2021. A P/E of just eight for FY25 suggests a lot of bad news is factored in as well.
Half-year numbers are due on 26 August. An unexpected bit of good news could see the shares jump. Any worsening could easily leave even new holders under water. This is a bit too risky for me, as things stand.
But the ‘winner’ is…
Occupying top spot is Sainsbury (LSE: SBRY). Initially, I found this rather surprising. After all, the company’s share price, while lagging the FTSE 100 index slightly, is still up 10% year to date. That’s fairly impressive considering that the consumer economy is hardly firing on all cylinders. The yield of 6.1% is tempting too.
Dig a bit deeper, however, and I can see why some short sellers are salivating.
Sainsbury has already signalled that this year’s profits will be flat at best due to price wars. Margins could be trimmed further if costs keeps rising. Elsewhere, sales at Argos have been falling.
Most worrying for me though has been the significant selling by numerous directors, including CEO Simon Roberts. Executives clearly have the right to protect their wealth. But the fact that this happened en masse in April and May makes this Fool reluctant to ponder taking a position today.
