4 most shorted stocks in the UK that Fools think are long-term investments!

Short stocks are those that a trader 'borrows' if he believes the stock will go down in value. The investor then sells them at the current market price, intending to buy the same shares later at a lower price, return the shares to the lender, and pocket the difference as profit. But which UK stocks are our four free website writers taking a position against short sellers?

Barratt Developments

What it does: Barratt Developments is Britain's largest housebuilder by volume, and a major supplier of family homes.

Written by Royston Wild. Barratt Developments (LSE:BDEV) is the joint-seventh-shortest stock on the London Stock Exchange. Love boohoo Group again The Burberry Groupa weight of 4.3% of its shares is currently short.

This decline reflects weaker than normal activity in the housing market. Mortgage affordability remains under pressure as interest rates remain stubbornly high. And they will remain so if the Bank of England fails to cut its benchmark from current levels.

Reflecting these dire circumstances, Barratt predicts that 13,000 to 13,500 homes will be completed this financial year. That's down from 14,004 last year, and 17,206 the year before that.

I maintain a bullish take on FTSE 100 builder, however. If interest rates start to (likely) fall in the coming months, demand for housing may rise again.

And in the longer term, sales of new properties should increase slightly as Britain's population grows rapidly. Labour's promise to loosen planning rules – thereby building 1.5m new homes between now and 2029 – should also give Barratt's campaign a healthy boost.

Royston Wild is a shareholder in Barratt Developments.

Burberry

What it does: Burberry is a British luxury fashion brand founded in 1856. It is best known for its famous check pattern.

Written by Charlie Keough. It's been a tough 12 months for the British fashion icon Burberry (LSE: BRBY). It's down a whopping 68.2% at the time of writing, and people are betting on the stock as such.

But not me. Instead, I think now would be a wise time to consider buying some stocks. Let me explain why.

The stock is now at its lowest in 14 years. It trades at a price-to-earnings ratio of just 9.5, below its historical average of 22.

Burberry may face other challenges in the coming months. It expects to post an operating loss for the year. And with continued economic uncertainty, its share price may continue to deteriorate in the near term.

But looking at that, I'm sure Burberry will be able to recover. Spending will increase again in the coming years as interest rates are reduced. We have seen the Chinese economy falter recently, but I remain optimistic about its long-term growth. China is one of Burberry's biggest markets.

Charlie Keough does not own shares in Burberry.

Domino's Pizza

What it does: Domino's Pizza sells handmade pizzas to customers in the UK and Republic of Ireland.

Written by Paul Summers. There aren't many super-shortened shares that I like the look of but would do differently Domino's Pizza (LSE: DOM).

Granted, things could be better. The stock has been in the worst shape of 2024 so far and half-year results in August did little to bolster the market. Annual profit is now expected to come in below market expectations due to “slow start to the year“.

However, things have looked better in recent months, helped by stellar sales during Euro 2024.

Domino's Pizza also boasts many of the hallmarks of quality that I look for, including high operating margins and a return on investment in the business.

Indications that inflation will remain around 2% could lead to continued improvement in consumer confidence and pressure short sellers to move forward.

Meanwhile, there is a dividend yield of 3.9%.

Paul Summers has no position at Domino's Pizza

The RS group

What it does: RS Group is a global distributor of 750,000+ maintenance, repair, and service parts for the industrial sector.

Written by Zaven Boyrazian. The RS group (LSE:RS1) is one of the most shorted companies London Stock Exchange right now. The electronics supplier is going through a rough patch. Due to the glut of goods around the world following the pandemic, coupled with economic instability, the demand for electronics, especially among consumers, has decreased.

The result is stagnant income and rising costs, which drags down the economy. Therefore, it is easy to understand the distrust of investors.

However, there are some encouraging signs emerging for the bounceback. Economic conditions in the manufacturing industry show a slow but steady recovery. And RS Group has reported a return to modest growth in its top line. In terms of margins, management is currently undertaking an annual savings plan of £30m, of which £9m has already been achieved, with a further £22m to be delivered by March next year.

Couple this with the multi-million pound contracts in Australia and the declining debt burden, a buying opportunity may arise for patient investors, in my view.

Zaven Boyrazian has no shares in RS Group.