Shorters have success with gold and pharma—but not much else
11 December 2013 London
Image: Shutterstock
Markit Securities Finance has revealed its top US shorts, which shows that the 20 best performing shorts fell by over 41 percent after seeing short interest reach a new annual high.
Though this year has been painful for shorters, what with the success of the Dow Jones Industrial Average and the S&P 500, Andrew Laird, an analyst at Markit, said that some savvy short sellers were able to find opportunities that provided impressive returns.
Metal and mining companies were the most lucrative shorts as gold declined by 25 percent including ANV and KLI, and volatile pharma companies also dominated the list, including ARIA and VICL.
Ariad Pharmaceuticals, which researches, develops and commercialises the small molecule medicens for cancer treatment, led the way as the worst performing share, said Laird.
He added that—as with many pharma names—most of the underperformance came following a single event. “For Ariad that event occurred in early October when FDA put partial hold on its trial for Iclusig, a medicine for leukemia that was approved last year.”
“Across the sector, the highest average share price underperformance came from Vical Inc, which fell by 63 percent on average following 12 new annual highs in demand to borrow. The firm develops gene-based cancer treatments and infectious disease vaccines by use of DNA technology. It suffered a heavy setback in one of its promising melanoma treatment trials which sent its shares down sharply.”
The collapsing price of gold has also provided plenty of opportunities for short sellers.
“Allied Nevada Gold Corp, a gold exploration and development company working primarily on project in Nevada, posted disappointing Q2 earnings and suffered from decreasing gold prices throughout the year,” said Laird. Year to date, the shares of ANV are down 88 percent and recorded 17 new short interests weekly highs.
“Interestingly, short sellers were late to the game, as shares in ANV did not see a fresh annual high in demand to borrow until April, at which time shares where already well bellow their January levels.”
Though this year has been painful for shorters, what with the success of the Dow Jones Industrial Average and the S&P 500, Andrew Laird, an analyst at Markit, said that some savvy short sellers were able to find opportunities that provided impressive returns.
Metal and mining companies were the most lucrative shorts as gold declined by 25 percent including ANV and KLI, and volatile pharma companies also dominated the list, including ARIA and VICL.
Ariad Pharmaceuticals, which researches, develops and commercialises the small molecule medicens for cancer treatment, led the way as the worst performing share, said Laird.
He added that—as with many pharma names—most of the underperformance came following a single event. “For Ariad that event occurred in early October when FDA put partial hold on its trial for Iclusig, a medicine for leukemia that was approved last year.”
“Across the sector, the highest average share price underperformance came from Vical Inc, which fell by 63 percent on average following 12 new annual highs in demand to borrow. The firm develops gene-based cancer treatments and infectious disease vaccines by use of DNA technology. It suffered a heavy setback in one of its promising melanoma treatment trials which sent its shares down sharply.”
The collapsing price of gold has also provided plenty of opportunities for short sellers.
“Allied Nevada Gold Corp, a gold exploration and development company working primarily on project in Nevada, posted disappointing Q2 earnings and suffered from decreasing gold prices throughout the year,” said Laird. Year to date, the shares of ANV are down 88 percent and recorded 17 new short interests weekly highs.
“Interestingly, short sellers were late to the game, as shares in ANV did not see a fresh annual high in demand to borrow until April, at which time shares where already well bellow their January levels.”
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