Hedge Hub readers shouldn’t have been too surprised by yesterday’s 15 percent slump in Yell’s share price.

The directories firm — the one behind the UK’s Yellow Pages — faces months of talks with banks and shareholders after yesterday saying it plans to restructure its roughly 4 billion-pound debt burden for the second time in nine months.

Yell has had to battle a slump in classified advertising spending and a shift to online from print publications, and analysts have been predicting it could breach its covenants as soon as the start of next year.

Our blog on June 23, citing research from Dataexplorers, showed that Yell Group is among the top ten non-financial firms with the biggest net debt to equity ratios out of the 300 largest listed companies in the UK.

We also showed that Yell ranked 1st in Dataexplorers’ Negative Sentiment indicator, which highlights where stock out on loan — usually used for shorting — has been highest and is rising.

Some fund managers have been buying, and making money out of, companies whose share prices were trashed last year because refinancing looked difficult, but where access to funds have recently become easier.

However, firms treading too close to the edge — carrying massive debt burdens while trading is rocky — could find it a different story.

The research also highlighted Debenhams as being in the top ten for net debt to equity and 4th on the negative sentiment score, as well as several companies in the U.S., Japan and Europe.

Which company is next in line for its share price to take a kicking because of its debt?

Hedge funds and other investors are shorting stocks laden with the biggest debts, according to stock lending research group DataExplorers, betting they may struggle to refinance themselves.

According to the research, Yell Group and Debenhams are among the top ten non-financial firms with the biggest net debt to equity ratios out of the 300 largest listed companies in the UK.

They also rank 1st and 4th respectively in Dataexplorers’ ‘Negative Sentiment’ (DNS) indicator, which is highlights where stock out on loan — usually used for shorting — has been highest and is rising.

In Europe, meanwhile, Itinere Infraestructuras and Grupo Ferrovial are among the top ten firms with the biggest net debt to equity ratios, and rank 8th and 15th in Dataexplorers’ DNS score.

In the U.S., Caterpillar and Autozone are in the top ten for debt ratios and rank 40th and 44th on the DNS, while in Japan debt-heavy Kintetsu, Japan Airlines and Odakyu Electric Railway rank 9th, 12th and 13th on the DNS score.

“This reflects recent concerns about banks failing to lend, or to roll over existing loans, as well as the capacity of some companies to service debt from current revenues,” the paper says.

This bet by many funds is in stark contrast to the view expressed by Crispin Odey, who earlier this year pointed to the start of a new bull market and who recently told clients he sees the best opportunities in “prodigal” companies.

“I still find myself coming out of meetings with companies whose share price is up fivefold since January and wanting to fill my boots,” he enthused.

“But it is quite a narrow field. It encompasses companies that at one stage looked like they would be denied refinancing but have now secured it.”