Upping the ante against mortar

The bears are circling retailers ahead of the holiday season.

Short sellers have revived their bets against brick-andmortar retailers in recent weeks, taking their most aggressive positions in months. Short positions against the SPDR S&P Retail fund, one of the biggest retail exchangetraded funds, last week hit 441 percent of the fund’s available shares, due to multiple borrowings by bearish speculators, according to financialdata firm S3 Partners.

That was twice the percentage of shares investors shorted at the same time last year and the highest level in roughly eight months.

Short sellers — who have wagered $7.7 billion against retailers including Macy’s, Kohl’s and Nordstrom -- borrow shares and sell them, expecting to repurchase them at lower prices and collect the difference as profit. Mall owners are also being targeted, with billionaire investor Carl Icahn among their biggest detractors in recent months.

Despite expectations for a solid holiday shopping season, several investors said their bearish bets are based on retailers’ struggles in a highly competitive landscape and consumers’ growing preference for digital shopping. And investors say they will closely watch the results from Dollar General, Big Lots and Lululemon, which are due to report results this week.

The wagers against retailers stand in contrast to investors’ more bullish take on the stock market. Bets against the SPDR S&P 500 Trust, the biggest ETF tracking the broad index, stand at just 15 percent of available shares, near the lowest levels of the year, according to S3. The S&P 500 has surged 25 percent this year.

“Everyone talks about the holiday season and how retailers are doing better,” said Seth Golden, a 43-year-old consultant for the consumer-packaged goods industry in Ocala, Fla. “But retailers are fighting an uphill battle. It doesn’t matter what many of them do at this point.”