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The most popular shares in January

Sophie Lund-Yates assesses some of the FTSE 100, FTSE 250 and overseas shares most popular with HL clients in January.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

We take a look at the companies most popular with HL clients in January, and what they could offer investors.

January’s most popular shares

The lists below show the FTSE 100 and FTSE 250 shares (excluding investment trusts) with the highest number of net buys (buys minus sells) among HL clients in January. We’ve also included the most popular large* overseas shares (excluding investment trusts and ETFs).

More about international share dealing

Shares listed alphabetically.

*Of equal or greater size than the market capital of the smallest FTSE 350 stock.

These are provided for your interest, but aren’t a guide as to how you should invest. You should consider your own aims and attitude to risk before making any investment decisions, and remember that investments will fall as well as rise in value so you could back less than you invest. Past performance is not a guide to the future. Please remember yields are variable and not guaranteed. If you’re not sure whether an investment is right for you, please seek advice.

BT

BT released a disappointing set of results last week, as the impact of regulation and competition held back revenue. The brightest spot was Openreach, the wholly owned subsidiary that looks after the nation’s copper and fibre-optic cables. However, even here costs rose, and cash profits for the group came in 3% lower than last year.

The government has also decided to limit certain companies (like Huawei) to just 35% of the UK’s non-core 5G infrastructure. This decision was always going to leave some worse off than others. And BT thinks it’s going to set it back around half a billion pounds. It’s possible the regulator will try to limit the costs passed onto consumers, so BT may end up taking a lot of it on the chin.

Analysts are forecasting a prospective 7.6% dividend yield for BT in the next twelve months, but expect the group to cut its dividend from 2021. This is because of the investment required to bring faster broadband to the UK over the coming years. A cut’s not guaranteed, but this is a reminder of why investors shouldn’t rely on getting their income from one or two companies.

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Marks and Spencer

The Marks & Spencer share price has fallen 20% since January’s third quarter results. It’s struggling in a tough retail environment – the British Retail Consortium said 2019 was the worst for shops in 25 years. The crucial festive season was bleak too, a sentiment echoed by M&S when it reported a 3.7% fall in Clothing & Home sales.

Negative trends have been getting less dramatic, and there are glimmers of hope from Womenswear- but we’d suggest keeping an eye on this. Poor performance has been compounded by M&S’ own stock-buying mistakes, which is the kind of thing it can ill afford at the moment. Weak sales combined with the burdensome costs of maintaining and restructuring the store estate means profits have taken a hit.

There are brighter spots though. The food business has been outperforming the market, helped by lower pricing. The joint venture with Ocado will launch in September, and paired with the hard work done on improving the food proposition, and M&S’ stellar brand heritage, could hold sales in good stead going forwards.

Overall it’s a time of big change for the high street giant. There’s still plenty of work to do, although there are reasons for optimism. It’s unlikely to be a smooth ride from here though.

See the M&S share price and charts

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Tesla

It might only be February, but so far Tesla’s had a pretty electrifying year. Production last quarter hit a record high and, crucially, profits and cash flow have stayed positive - not something Tesla has been all that successful at historically. During January the shares rose over 50%.

However, one thing we’ve not spoken about in depth is the large number of Tesla shares that have been ‘sold short’, what that means for the share price and what Tesla’s current bull-run means for shorters.

Short sellers borrow a company’s shares from another investor and sell them. They hope that the share price will fall and they’ll be able to buy the shares back for less than they sold them, and return the shares to the original owner.

At the start of the year short selling accounted for 21% of Tesla share sales. That’s an extraordinarily high number.

Anyone shorting Tesla’s shares will have suffered from January’s share price rise. And we think this may have led to something called a ‘short squeeze’.

To close a short position, you need to buy back the shares you’ve sold and return them to the lender. As the share price rises, the cost of doing so gets higher.

But shorters may be getting forced to close their positions to limit future losses. And this means more buyers for a share that’s already in high demand. That pushes the share price up further, forcing more shorters to close their positions, and so on.

What makes Tesla unusual is that it has such a large number of shorters that this ‘squeeze’ could be a key driving force behind the share price. Only time will tell and as always past performance isn’t a guide to the future.

See the Tesla share price and charts

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Before you can invest in US companies you’ll need to complete a W-8BEN. Find out more about the charges.

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.


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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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