Earnings calls see shorters pick their favourites
29 September 2014 London
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S&W Seed, Neopost and UNY Group are among the most shorted companies ahead of announcing their earnings in the final week of the second quarter results season.
Markit Securities Finance analyst Simon Colvin found that Agricultural company S&W Seed is the most shorted US company, with 10.3 percent of its shares out on loan prior to its 29 September earnings call.
It also received the largest jump in interest, with short sellers increasing their holdings by 38 percent in the run-up to its earnings call.
Colvin commented: “While the cause for the increased demand to borrow is hard to pin down, the firm’s main crop alfalfa has been under pressure in recent years as the California drought continues to bite. This has seen its shares fall by over a quarter since the start of the year.”
In Europe, French manufacturer Neopost saw the largest demand to borrow ahead of earnings, with 6.4 percent of its shares out on loan.
“This large demand to borrow hides the fact that short sellers have been actively covering their positions in the last few months as the firm has seen shorts nearly halved their positions since the start of the year. Demand to borrow the stock is close to its lowest level in over three years,” commented Colvin.
Japanese retailer UNY Group had 9 percent of its shares out on loan, twice the level seen at the start of 2014.
“Japanese firms make up four of the five companies with more than 3 percent of shares out on loan ahead of results. Of these three are retail firms which have continued to come under pressure as shorts bet that consumer spending will continue to come under pressure in the wake of Prime Minister Abe’s recent economic intervention.”
“This looks to have played out last week when Asahi reported weaker than expected results which sent the heavily shorted retailer’s shares down sharply.”
Markit Securities Finance analyst Simon Colvin found that Agricultural company S&W Seed is the most shorted US company, with 10.3 percent of its shares out on loan prior to its 29 September earnings call.
It also received the largest jump in interest, with short sellers increasing their holdings by 38 percent in the run-up to its earnings call.
Colvin commented: “While the cause for the increased demand to borrow is hard to pin down, the firm’s main crop alfalfa has been under pressure in recent years as the California drought continues to bite. This has seen its shares fall by over a quarter since the start of the year.”
In Europe, French manufacturer Neopost saw the largest demand to borrow ahead of earnings, with 6.4 percent of its shares out on loan.
“This large demand to borrow hides the fact that short sellers have been actively covering their positions in the last few months as the firm has seen shorts nearly halved their positions since the start of the year. Demand to borrow the stock is close to its lowest level in over three years,” commented Colvin.
Japanese retailer UNY Group had 9 percent of its shares out on loan, twice the level seen at the start of 2014.
“Japanese firms make up four of the five companies with more than 3 percent of shares out on loan ahead of results. Of these three are retail firms which have continued to come under pressure as shorts bet that consumer spending will continue to come under pressure in the wake of Prime Minister Abe’s recent economic intervention.”
“This looks to have played out last week when Asahi reported weaker than expected results which sent the heavily shorted retailer’s shares down sharply.”
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