Short selling consists of betting on a decline in a security's price. In practice, an investor borrows shares (from a broker or another investor), sells them immediately on the market, and then hopes to buy them back later at a lower price to return them. The difference constitutes the profit. If the price rises instead of falling, the loss can theoretically be unlimited, making it a high-risk strategy reserved for sophisticated market participants.

In France, short selling is regulated by the AMF under European rules. In practice, any net short position reaching 0.1% of a listed company's share capital must be disclosed to the regulator, with further disclosures required at every 0.1 percentage point threshold, whether increasing or decreasing. Once the position reaches 0.5% of the capital, it becomes public. The objective is twofold: to ensure market transparency and to allow the regulator to identify potential excessive speculative movements. Consequently, there is a "grey area" between 0.1% and 0.5% where only the regulator is informed.

During acute crises (such as in 2008 or at the start of the Covid-19 pandemic), authorities have even temporarily banned short selling on certain stocks, particularly in the banking sector, to curb panic selling.

Anglo-Saxon hedge funds dominate the market

The primary users of short selling are hedge funds, certain institutional investors, and specialized traders. They use it for speculation, but also for portfolio hedging or to arbitrage valuation gaps. In France, a few names, often Anglo-Saxon, regularly find themselves in the spotlight when taking positions against listed companies, sometimes triggering fierce reactions from the executives involved.

As of April 16, 2026 (MarketScreener with AMF data), the largest short sellers of French companies are Marshall Wace, AQR Capital, Citadel, DE Shaw, QUBE, and Two Sigma. The most shorted companies as a percentage of share capital are:
- Ubisoft (9 identified funds)
- Teleperformance (12 identified funds)
- Valeo (8 identified funds)
- Edenred (10 identified funds)
- Vallourec (3 identified funds)

There are also activists specializing in short selling. Their process differs from that of a hedge fund, which typically employs a diversified and often quantitative approach. Sellers like Muddy Waters or Gotham prefer to target a specific company after building a detailed case against it. By publicly revealing their short position, which has already been established, they trigger sharp negative reactions, ensuring rapid capital gains.

Market efficiency vs. suspicions of manipulation

Proponents of short selling put forward several arguments. First, it contributes to market efficiency by enabling better price discovery: without short sellers, bubbles could inflate for longer. Second, it acts as a "whistleblower": some funds have uncovered fraud or accounting weaknesses while investigating overvalued companies. Finally, it provides liquidity, facilitating trading even in stressed markets.

Conversely, detractors denounce it as a potentially destabilizing mechanism. During periods of stress, short selling can exacerbate price drops and fuel downward spirals. It is also perceived as a speculative attack against fragile companies or even entire sectors. In France, the subject is particularly sensitive in political and media circles, where the "vulture fund" trope remains a convenient foil.