A handful of European stocks have become a battleground for retail traders taking on hedge fund short sellers, in a campaign with echoes of the “meme stock” craze that gripped Wall Street during the Covid-19 pandemic.
Companies including Germany’s Hensoldt and Renk Group and French satellite business Eutelsat have surged in recent weeks, far outstripping a broader rally led by the defence sector as investors anticipate a surge in military spending across Europe.
Analysts say small-scale traders — sometimes co-ordinating their efforts on social media forums such as Reddit — have turbocharged the gains by deliberately buying into stocks shorted by hedge funds including Marshall Wace and Millennium.
“There is a tectonic shift happening in Europe,” said Roland Kaloyan, an equity strategist at Société Générale, likening recent popular retail interest to 2021’s meme stock mania.
Then, Reddit-inspired traders targeted heavily shorted stocks — notably the video games retailer GameStop — sending share prices rocketing and forcing hedge fund Melvin Capital to close after it suffered huge losses.
The recent share price moves in Europe have been less extreme, and the stocks have not hit the same stratospheric valuations reached by GameStop. But the “short squeezes” encouraged by retail buyers had involved “the same mechanics” as the meme stock saga, Kaloyan said.
Hedge funds such as Millennium, Qube Research & Technologies and Marshall Wace have reined in their negative bets in recent weeks on Renk Group, according to data provider Breakout Point. Renk’s stock price has climbed nearly 50 per cent in the past three weeks.
Shares in French aircraft parts supplier Latecoere, another popular hedge fund short, have risen 80 per cent since late February.
By contrast, the broader Stoxx Europe Aerospace & Defense index is up about 16 per cent over the same period.
The nearly 300 per cent surge in Eutelsat has cost short sellers approximately $187mn in mark-to-market losses in the three weeks to March 14, while Hensoldt short sellers have suffered $110mn in losses as its shares climbed 40 per cent in the same period, according to figures from S3 Partners.
One poster on Boursorama — a French stock market forum — said Eutelsat had “an enemy” in Darsana, the US-based hedge fund that holds short positions in Eutelsat and its Luxembourg-based rival SES.
Another said: “If no one sells, the short sellers will have to buy more . . . Keep your shares and you will not lose.”
BlackRock, the world’s biggest asset manager, also held significant shorts in Eutelsat, before trimming these below the disclosure threshold of 0.5 per cent in recent weeks. “BlackRock is now completely out,” one user gleefully informed the forum last week.
Investors have also taken to “r/Aktien” and “r/wallstreetbetsGER” on Reddit — German versions of Reddit’s r/wallstreetbets forum — asking whether it is “time to buy” small and mid-sized stocks listed in Frankfurt.
One user said: “On this wonderful day I’ve gone long Renk. I hope that the lights go on in the fat cats’ heads and that they see what is soon going to happen here.”
Marshall Wace, Qube, Darsana, Millennium and BlackRock declined to comment.
Retail trading platforms report a massive pick up in activity. Flatexdegiro, a German retail broker, said it had handled 70 times as many trades in Eutelsat shares over the past month compared with the month before, while trades in Renk Group have risen more than fourfold.
eToro, a UK-focused retail broker, said traders had opened 18 times as many positions in Hensoldt over the past month as they had in the previous month.
The sudden burst of interest in European small stocks comes as President Donald Trump’s erratic tariff announcements have roiled US equity markets in recent weeks, fanning concerns about slowing economic growth in the world’s largest economy.
European stocks have been among the main beneficiaries of the resulting investor rotation out of US stocks, with the region’s prospects further boosted by Germany’s plans to unleash military spending and overhaul its infrastructure.
Some traders have taken aim at the Trump administration and sought to portray their activity as an effort to bolster Europe’s rearmament drive following the president’s insistence that the continent should no longer rely on the US for defence.
“I don’t care about the profit, I just want to pool some of my money to help, and move away from US assets & asset managers,” wrote one poster on Reddit’s r/eupersonalfinance forum.
In contrast with the US, which has limited disclosure on short bets, hedge funds and other investors have to disclose when they have shorted more than 0.5 per cent of a company’s shares in the EU and the UK, making it easier for retail traders to target a fund’s positions.
Eutelsat last year had nearly 100 per cent of its shares out on loan — a proxy for short interest — before this dropped to 80 per cent over the past two weeks as some funds bought back their positions, according to data from S&P Global.
The company’s recent share price surge appears to have prompted hedge funds to quickly exit other negative bets when shares began to rally, according to Aleksander Peterc, head of small- and mid-caps at Bernstein.
“There were very high short positions in small stocks,” he said. “It rang alarm bells when Eutelsat was squeezed, so [hedge funds] killed their short positions in other companies too, very quickly.”
Additional reporting by Costas Mourselas and Ray Douglas
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