##{"id":59498,"date":"2012-02-14T11:09:29","date_gmt":"2012-02-14T00:09:29","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2012\/02\/14\/the-short-report-58\/"},"modified":"2012-02-14T11:09:29","modified_gmt":"2012-02-14T00:09:29","slug":"the-short-report-58","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2012\/02\/14\/the-short-report-58\/","title":{"rendered":"The Short Report"},"content":{"rendered":"

.ref1 {background-color:#B8E3F8;}<\/p>\n

\n\tBy Chris Shaw<\/p>\n

\n\tFor some time the majority of the major short positions on the Australian market have been retail stocks or those companies exposed to discretionary spending, a positioning that has been proven to be justified with the likes of JB<\/span> Hi-Fi<\/span> ((JBH<\/span>)) reporting interim results indicating trading conditions remain very difficult.<\/p>\n

\n\tThe market has not adjusted its positioning significantly over the past week, as among the top short positions are JB<\/span> Hi-Fi<\/span>, Myer ((MYR<\/span>)), David Jones ((DJS)), Billabong<\/span> ((BBG<\/span>)) and Harvey Norman ((HVN<\/span>)), as well as discretionary spending plays such as Flight Centre ((FLT<\/span>)) and Wotif.com Holdings ((WTF)).<\/p>\n

\n\tOutside of retail exposed stocks, interest is in the more significant changes in short positions in recent sessions. Among the largest increases in shorts for the week from January 31 was in Linc<\/span> Energy ((LNC<\/span>)), where positions increased by 1.66 percentage points to 3.82%. This follows the release of the group's quarterly production report at the end of last month.<\/p>\n

\n\tLynas<\/span> Corporation ((LYC<\/span>)) also saw shorts jump by a little more than 1.6ppts to 8.79%, an increase that has continued even after the company was granted a temporary operating licence<\/span> for its LAMP facility in Malaysia.<\/p>\n

\n\tAustralian Infrastructure ((AIX)) shorts increased from less than 0.4% to nearly 2.0% for the week from January 31, which may be a reflection of some concerns stemming from pressure on the group's airport assets given Hochtief<\/span> is having trouble selling its stake in the Budapest and Athens airports.<\/p>\n

\n\tShorts also rose significantly in Kingsgate<\/span> Consolidated ((KCN<\/span>)), total positions jumping to 2.75% from less than 1.2% previously. This came despite a quarterly report that surprised to the upside in production terms.<\/p>\n

\n\tThe largest weekly increase in shorts came from Billabong<\/span> ((BBG<\/span>)), with a jump of 1.8ppts to 10.88% enough to reverse what had been a similar sized decline in short positions in the stock the previous week.<\/p>\n

\n\tDeclines in company short positions were less pronounced for the week from January 31, Fortescue<\/span> leading the way with a fall of 1.96ppts to total shorts of just 1.68%. This followed a solid quarterly production report but one that showed some sign of margin slippage.<\/p>\n

\n\tOther significant declines in short positions for the week were in Asciano<\/span> ((AIO<\/span>)), where shorts now stand at less than 0.9%, and in Rialto Energy ((RIA<\/span>)), where shorts have again dropped below 5.4% from 6.7% previously. On a monthly basis Rialto has still seen shorts rise from almost zero to more than 5.0%, while the decline in shorts for Asciano<\/span> follows a period of relative underperformance<\/span> by the stock against peers.<\/p>\n

\n\tThe largest fall in weekly shorts was in ISO, a Small Ordinaries ETF<\/span> derivative. Total shorts here fell by more than 5.5ppts to 11.42%.<\/p>\n

\n\tElsewhere among the monthly changes, OneSteel<\/span> ((OST<\/span>)) has seen shorts rise by 2.5ppts to 5.7% and Linc<\/span> by 2.4ppts to 3.8%. The changes for OneSteel<\/span> come as the company continues to deal with still difficult steel and iron ore market conditions.<\/p>\n

\n\tThe major monthly declines in shorts have been seen in Gloucester Coal ((GCL<\/span>)) and QR<\/span> National ((QRN<\/span>)), which has been the peer performing the best relative to Asciano<\/span> in recent weeks. Despite months of poor performance in share price terms, shorts in QBE<\/span> Insurance ((QBE<\/span>)) declined in the month from January 6 to 1.39% from 2.16% previously.
\n\t <\/p>\n

\n\tTop 20 Largest Short Positions<\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n\t\t\t\tRank<\/td>\n\n\t\t\t\tSymbol<\/td>\n\n\t\t\t\tShort Position<\/td>\n\n\t\t\t\tTotal Product<\/td>\n\n\t\t\t\t%Short<\/td>\n<\/tr>\n
\n\t\t\t\t1<\/td>\n\n\t\t\t\tJBH<\/span><\/td>\n\n\t\t\t\t21818917<\/td>\n\n\t\t\t\t98833643<\/td>\n\n\t\t\t\t22.06<\/td>\n<\/tr>\n
\n\t\t\t\t2<\/td>\n\n\t\t\t\tMYR<\/span><\/td>\n\n\t\t\t\t72408624<\/td>\n\n\t\t\t\t583384551<\/td>\n\n\t\t\t\t12.37<\/td>\n<\/tr>\n
\n\t\t\t\t3<\/td>\n\n\t\t\t\tFXJ<\/span><\/td>\n\n\t\t\t\t269346195<\/td>\n\n\t\t\t\t2351955725<\/td>\n\n\t\t\t\t11.49<\/td>\n<\/tr>\n
\n\t\t\t\t4<\/td>\n\n\t\t\t\tISO<\/td>\n\n\t\t\t\t617102<\/td>\n\n\t\t\t\t5403165<\/td>\n\n\t\t\t\t11.42<\/td>\n<\/tr>\n
\n\t\t\t\t5<\/td>\n\n\t\t\t\tDJS<\/td>\n\n\t\t\t\t58318435<\/td>\n\n\t\t\t\t524940325<\/td>\n\n\t\t\t\t11.09<\/td>\n<\/tr>\n
\n\t\t\t\t6<\/td>\n\n\t\t\t\tBBG<\/span><\/td>\n\n\t\t\t\t27818742<\/td>\n\n\t\t\t\t255102103<\/td>\n\n\t\t\t\t10.88<\/td>\n<\/tr>\n
\n\t\t\t\t7<\/td>\n\n\t\t\t\tFLT<\/span><\/td>\n\n\t\t\t\t9344731<\/td>\n\n\t\t\t\t100009946<\/td>\n\n\t\t\t\t9.33<\/td>\n<\/tr>\n
\n\t\t\t\t8<\/td>\n\n\t\t\t\tLYC<\/span><\/td>\n\n\t\t\t\t150716728<\/td>\n\n\t\t\t\t1713846913<\/td>\n\n\t\t\t\t8.79<\/td>\n<\/tr>\n
\n\t\t\t\t9<\/td>\n\n\t\t\t\tCOH<\/span><\/td>\n\n\t\t\t\t4573208<\/td>\n\n\t\t\t\t56902433<\/td>\n\n\t\t\t\t8.01<\/td>\n<\/tr>\n
\n\t\t\t\t10<\/td>\n\n\t\t\t\tWTF<\/td>\n\n\t\t\t\t14197112<\/td>\n\n\t\t\t\t211736244<\/td>\n\n\t\t\t\t6.70<\/td>\n<\/tr>\n
\n\t\t\t\t11<\/td>\n\n\t\t\t\tHVN<\/span><\/td>\n\n\t\t\t\t68900358<\/td>\n\n\t\t\t\t1062316784<\/td>\n\n\t\t\t\t6.48<\/td>\n<\/tr>\n
\n\t\t\t\t12<\/td>\n\n\t\t\t\tTRS<\/span><\/td>\n\n\t\t\t\t1652056<\/td>\n\n\t\t\t\t26071170<\/td>\n\n\t\t\t\t6.34<\/td>\n<\/tr>\n
\n\t\t\t\t13<\/td>\n\n\t\t\t\tCRZ<\/span><\/td>\n\n\t\t\t\t13981140<\/td>\n\n\t\t\t\t233264223<\/td>\n\n\t\t\t\t5.99<\/td>\n<\/tr>\n
\n\t\t\t\t14<\/td>\n\n\t\t\t\tPPT<\/span><\/td>\n\n\t\t\t\t2475051<\/td>\n\n\t\t\t\t41980678<\/td>\n\n\t\t\t\t5.89<\/td>\n<\/tr>\n
\n\t\t\t\t15<\/td>\n\n\t\t\t\tSEK<\/span><\/td>\n\n\t\t\t\t19892549<\/td>\n\n\t\t\t\t337101307<\/td>\n\n\t\t\t\t5.89<\/td>\n<\/tr>\n
\n\t\t\t\t16<\/td>\n\n\t\t\t\tOST<\/span><\/td>\n\n\t\t\t\t76775962<\/td>\n\n\t\t\t\t1342393583<\/td>\n\n\t\t\t\t5.72<\/td>\n<\/tr>\n
\n\t\t\t\t17<\/td>\n\n\t\t\t\tGNS<\/span><\/td>\n\n\t\t\t\t46938546<\/td>\n\n\t\t\t\t848401559<\/td>\n\n\t\t\t\t5.52<\/td>\n<\/tr>\n
\n\t\t\t\t18<\/td>\n\n\t\t\t\tRIA<\/span><\/td>\n\n\t\t\t\t23038796<\/td>\n\n\t\t\t\t431256264<\/td>\n\n\t\t\t\t5.35<\/td>\n<\/tr>\n
\n\t\t\t\t19<\/td>\n\n\t\t\t\tRIO<\/td>\n\n\t\t\t\t22749882<\/td>\n\n\t\t\t\t435758720<\/td>\n\n\t\t\t\t5.20<\/td>\n<\/tr>\n
\n\t\t\t\t20<\/td>\n\n\t\t\t\tBOQ<\/span><\/td>\n\n\t\t\t\t11947637<\/td>\n\n\t\t\t\t229598329<\/td>\n\n\t\t\t\t5.19<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\n\tTo see the full Short Report, please go to this link<\/a><\/p>\n

\n\tIMPORTANT INFORMATION ABOUT THIS REPORT<\/i><\/strong><\/p>\n

\n\tThe above information is sourced from daily reports published by the Australian Investment & Securities Commission (ASIC<\/span>) and is provided by FNArena<\/span> unqualified as a service to subscribers. FNArena<\/span> would like to make it very clear that immediate assumptions cannot be drawn from the numbers alone.<\/i><\/p>\n

\n\tIt is wrong to assume that short percentages published by ASIC<\/span> simply imply negative market positions held by fund managers or others looking to profit from a fall in respective share prices. While all or part of certain short percentages may indeed imply such, there are also a myriad of other reasons why a short position might be held which does not render that position “naked” given offsetting positions held elsewhere. Whatever balance of percentages truly is a “short” position would suggest there are negative views on a stock held by some in the market and also would suggest that were the news flow on that stock to turn suddenly positive, “short covering” may spark a short, sharp rally in that share price. However short positions held as an offset against another position may prove merely benign.<\/i><\/p>\n

\n\tOften large short positions can be attributable to a listed hybrid security on the same stock where traders look to “strip out” the option value of the hybrid with offsetting listed option and stock positions. Short positions may form part of a short stock portfolio offsetting a long share price index (SPI<\/span>) futures portfolio – a popular trade which seeks to exploit windows of opportunity when the SPI<\/span> price trades at an overextended discount to fair value. Short positions may be held as a hedge by a broking<\/span> house providing dividend reinvestment plan (DRP<\/span>) underwriting services or other similar services. Short positions will occasionally need to be adopted by market makers in listed equity exchange traded fund products (EFT). All of the above are just some of the reasons why a short position may be held in a stock but can be considered benign in share price direction terms due to offsets.<\/i><\/p>\n

\n\tMarket makers in stock and stock index options will also hedge their portfolios using short positions where necessary. These delta hedges often form the other side of a client's long stock-long put option protection trade, or perhaps long stock-short call option (“buy-write”) position. In a clear example of how published short percentages can be misleading, an options market maker may hold a short position below the implied delta hedge level and that actually implies a “long” position in that stock.<\/i><\/p>\n

\n\tAnother popular trading strategy is that of “pairs trading” in which one stock is held short against a long position in another stock. Such positions look to exploit perceived imbalances in the valuations of two stocks and imply a “net neutral” market position.<\/i><\/p>\n

\n\tAside from all the above reasons as to why it would be a potential misconception to draw simply conclusions on short percentages, there are even wider issues to consider. ASIC<\/span> itself will admit that short position data is not an exact science given the onus on market participants to declare to their broker when positions truly are “short”. Without any suggestion of deceit, there are always participants who are ignorant of the regulations. Discrepancies can also arise when short positions are held by a large investment banking operation offering multiple stock market services as well as proprietary trading activities. Such activity can introduce the possibility of either non-counting or double-counting when custodians are involved and beneficial ownership issues become unclear.<\/i><\/p>\n

\n\tFinally, a simple fact is that the Australian Securities Exchange also keeps its own register of short positions. The figures provided by ASIC<\/span> and by the ASX<\/span> at any point do not necessarily correlate.<\/i><\/p>\n

\n\tFNArena<\/span> has offered this qualified explanation of the vagaries of short stock positions as a warning to subscribers not to jump to any conclusions or to make investment decisions based solely on these unqualified numbers. FNArena<\/span> strongly suggests investors seek advice from their stock broker or financial adviser before acting upon any of the information provided herein.<\/i><\/p>\n

\n\tTechnical limitations<\/strong><\/p>\n

\n\tIf you are reading this story through a third party distribution channel and you cannot see charts included<\/span>, we apologise<\/span><\/span><\/span>, but technical limitations are to blame.<\/em><\/strong><\/p>\n

\n\tFind out why FNArena<\/span><\/span> subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/p>\n","protected":false},"excerpt":{"rendered":"

FNArena’s weekly update on short positions in the Australian share market.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[90,23,89,35,24,91,88,37,22,31],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/59498"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=59498"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/59498\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=59498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=59498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=59498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}