Fake pilots, thrown phones, and 8 other reasons to short a stock
26 March 2013 London
Image: Shutterstock
SunGard's Astec Analytics has rounded up what it considers to be the ten hottest stocks from a securities lending perspective.
1 - At number one in the rankings is InterOil Corp. (IOC), which SunGard indicated was under mixed pressure last week. While some steady covering took place, helping to squeeze the share price and reducing the overall level of borrowing its stock (down 2 percent in the week), demand to short sell the stock climbed ever higher, said the firm. The cost of borrowing InterOil on Friday was four times higher than that of the week’s low on Tuesday, with some borrowers paying as much as 80 percent annualised to short sell it.
2 - Tesla Motors Inc. (TSLA) "Last week saw some positive reports coming from the company’s online media, helping to sure up Tesla’s share price as it announced it has seen its 3,000th Model S registered in California, and reached its goal of producing 400 of the cars per week seeing 500 deliveries of the Model S on average," said SunGard. However, it added that the recovery in share price, despite paring only some of the previous week’s losses, did little to dissuade short sellers, with the cost of borrowing Tesla almost tripling in the week."
3 - Boyd Gaming Corp. (BYD ) The Malaysian conglomerate Genting Group's purchase of Boyd’s Echelon development in Las Vegas meant a climbing share price, and after a number of generally positive analyst upgrades, "short sellers significantly stepped up their bets against the company last week, bringing the cost of borrowing the stock surging more than ten-fold, even as the number of shares borrowed climbed 7 percent," said the firm.
4 - Research in Motion Ltd. (BBRY) " Research in Motion once again makes it into the Top 10 list this week, as the US launch of the Z10 handset met a fairly muted response," noted SunGard. "While many were noting a somewhat lacklustre effort on the behalf of AT&T in promoting the new handset, alluding to the fact that they may not be optimistic of its potential to bring in money, analysts at Deutsche Bank were also noting that all their measurements so far show that sales of the Z10 have been disappointing in all the regions where they have been sold. Despite the falling share price, short sellers remained cautious overall, with some taking the opportunity to close out positions."
5 - Sandridge Energy Inc. (SD) Coming in at number five is oil and natural gas exploration company Sandridge. "Last week a regulatory filing cast doubt on CEO Tom Ward’s confidence in the company, or at least in his hopes of remaining in the position following the appointment of new board members after the spat with TPG-Axon, noting he had sold 3.7 million of his personal shares in Sandridge," said SunGard. "Astec data indicates the news brought about an uptick in short selling during the first half of the week, with the cost of borrowing almost doubling, only to pull back to its previous level in Thursday and Friday’s sessions – the share price drop seemingly removing much immediate speculation of further strong declines."
Places six to ten were taken by US Airways Group, who hit the headlines last week after a passenger managed to impersonate a pilot, Nokia Oyj, whose CEO was in trouble after throwing a Finnish TV presenter's iPhone to the ground during a tense interview, Green Mountain Coffee Roasters, United States Steel Corp, and Banco de Sabadell.
1 - At number one in the rankings is InterOil Corp. (IOC), which SunGard indicated was under mixed pressure last week. While some steady covering took place, helping to squeeze the share price and reducing the overall level of borrowing its stock (down 2 percent in the week), demand to short sell the stock climbed ever higher, said the firm. The cost of borrowing InterOil on Friday was four times higher than that of the week’s low on Tuesday, with some borrowers paying as much as 80 percent annualised to short sell it.
2 - Tesla Motors Inc. (TSLA) "Last week saw some positive reports coming from the company’s online media, helping to sure up Tesla’s share price as it announced it has seen its 3,000th Model S registered in California, and reached its goal of producing 400 of the cars per week seeing 500 deliveries of the Model S on average," said SunGard. However, it added that the recovery in share price, despite paring only some of the previous week’s losses, did little to dissuade short sellers, with the cost of borrowing Tesla almost tripling in the week."
3 - Boyd Gaming Corp. (BYD ) The Malaysian conglomerate Genting Group's purchase of Boyd’s Echelon development in Las Vegas meant a climbing share price, and after a number of generally positive analyst upgrades, "short sellers significantly stepped up their bets against the company last week, bringing the cost of borrowing the stock surging more than ten-fold, even as the number of shares borrowed climbed 7 percent," said the firm.
4 - Research in Motion Ltd. (BBRY) " Research in Motion once again makes it into the Top 10 list this week, as the US launch of the Z10 handset met a fairly muted response," noted SunGard. "While many were noting a somewhat lacklustre effort on the behalf of AT&T in promoting the new handset, alluding to the fact that they may not be optimistic of its potential to bring in money, analysts at Deutsche Bank were also noting that all their measurements so far show that sales of the Z10 have been disappointing in all the regions where they have been sold. Despite the falling share price, short sellers remained cautious overall, with some taking the opportunity to close out positions."
5 - Sandridge Energy Inc. (SD) Coming in at number five is oil and natural gas exploration company Sandridge. "Last week a regulatory filing cast doubt on CEO Tom Ward’s confidence in the company, or at least in his hopes of remaining in the position following the appointment of new board members after the spat with TPG-Axon, noting he had sold 3.7 million of his personal shares in Sandridge," said SunGard. "Astec data indicates the news brought about an uptick in short selling during the first half of the week, with the cost of borrowing almost doubling, only to pull back to its previous level in Thursday and Friday’s sessions – the share price drop seemingly removing much immediate speculation of further strong declines."
Places six to ten were taken by US Airways Group, who hit the headlines last week after a passenger managed to impersonate a pilot, Nokia Oyj, whose CEO was in trouble after throwing a Finnish TV presenter's iPhone to the ground during a tense interview, Green Mountain Coffee Roasters, United States Steel Corp, and Banco de Sabadell.
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