Data Explorers: Short sellers in position for IT earnings
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Data Explorers: Short sellers in position for IT earnings 18 July 2011London Reporter: Steven Lafferty
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Companies world-wide are busy updating the markets on their financial performance and earnings over the second quarter. The large U.S. banks will report earnings, but generally see low short interest, Data Explorers have chosen to use securities lending flow data to assess sentiment towards the Information Technology ahead of earnings.
IT giant Intel Corp will be in the spotlight this week as investors eagerly await its results which will provide indication on the performance of the IT and Semiconductor industries. First quarter earnings outstripped forecasts which prompted a share price rally over the second quarter before easing back in June. However, although short interest is low, short sellers have continued to increase their positions leading to an annual high of 1.4% of total shares outstanding. This is more than triple the short interest recorded at the last earnings report.
Yahoo! Inc shares have lost approximately 16% following its announcement that China-based Alibaba Group Holding had ceded ownership of its online-payment business. Short interest had dropped to annual lows of 1.0% but as the share price decline continued into March short interest quickly increased to 2.2% of total shares outstanding. Short covering in the past two weeks has reduced the current figure to 1.4% of total shares outstanding. Institutional investors have decreased holdings by 10% over the past month denoting growing bearish sentiment.
Ebay Inc. is investing in m-commerce and has recently acquired mobile-payment startup, Zong Inc. which can bolster Paypal’s existing system. As the share price has rallied over the past month, short interest remains low at less than 0.5% of total shares outstanding on loan, but institutional owners have cut holdings by 5% over the month.
French gaming stock, Ubisoft Entertainment SA (EPA:UBI), will also report earnings. Although the share price continues to trade at annual low, short interest remains static at 6% of total shares outstanding. Yet, institutional investment is positive as funds who lend have increase holdings by 60% over the year.
Intel and Yahoo! have convertible bonds in issue with can inflate the percentage of shares out on loan due to convertible arbitrage trading.
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