ESMA: the tip of the shorting iceberg
30 October 2014 London
Image: Shutterstock
The European Securities and Markets Authority (ESMA) has a total of 442 disclosed short positions under the rule (EU) 236/2012 that exceed the 0.5 percent threshold, as of 25 September.
As of 28 October, these publicly disclosed positions are spread across 250 companies and represent $14.1 billion of short exposure.
While a third of the companies that have a disclosed short position are the target of a single fund, several see many more than that—the 10 disclosed shorts in Swedish firm Elekta, for example.
According to Markit, ESMA’s data seems to underrepresent shorting activity overall, as the current aggregate value of the demand to borrow across the companies with publicly disclosed short positions represents $43.6 billion.
This is more than three times the aggregate value of disclosed positions.
Markit stated: “We estimate that the undisclosed data (positions smaller than 0.5 percent) across Europe for the 453 companies represent another $28 billion—almost double than that currently disclosed.”
Among the ten stocks that fall under the ESMA disclosure requirement, which sees the largest demand to borrow, the average gap between the public disclosed short positions and demand to borrow sits at 12.7 percent of shares outstanding.
Over the entire publicly disclosed universe, the average disclosed short interest stands at 1.7 percent.
This is compared with the Markit average demand to borrow of 3.2 percent of shares outstanding.
Medical equipment manufacturer Elekta is currently the most shorted out of the public sample in terms of percentage of publicly disclosed shorts.
The previously mentioned 10 disclosed shorts represent 12.4 percent of the company’s shares outstanding.
Market has found that demand to borrow the company’s shares stands at 19 percent of shares outstanding, indicating a significant amount of shorting activity that falls below the 0.5 percent threshold.
Other stocks with more than 5 percent of publicly disclosed short positions include FLSmidth & Co with 9.5 percent disclosed shares shorted, which compares to 17.8 percent of demand to borrow.
The company provides machinery to the mining and cement industry in Denmark.
Currently the firm is going through a restructuring coupled with a weak outlook for mining in the region. Goldman Sachs recently downgraded the company’s stock from “neutral” to a “sell”, according to Bloomberg reports.
Sainsbury’s has disclosed short positions of 7.3 percent, while total short interest data from Markit indicates a significantly higher 18.4 percent as midmarket retailers in the UK continue to lose market share, with German discount retailers continuing to grow.
As of 28 October, these publicly disclosed positions are spread across 250 companies and represent $14.1 billion of short exposure.
While a third of the companies that have a disclosed short position are the target of a single fund, several see many more than that—the 10 disclosed shorts in Swedish firm Elekta, for example.
According to Markit, ESMA’s data seems to underrepresent shorting activity overall, as the current aggregate value of the demand to borrow across the companies with publicly disclosed short positions represents $43.6 billion.
This is more than three times the aggregate value of disclosed positions.
Markit stated: “We estimate that the undisclosed data (positions smaller than 0.5 percent) across Europe for the 453 companies represent another $28 billion—almost double than that currently disclosed.”
Among the ten stocks that fall under the ESMA disclosure requirement, which sees the largest demand to borrow, the average gap between the public disclosed short positions and demand to borrow sits at 12.7 percent of shares outstanding.
Over the entire publicly disclosed universe, the average disclosed short interest stands at 1.7 percent.
This is compared with the Markit average demand to borrow of 3.2 percent of shares outstanding.
Medical equipment manufacturer Elekta is currently the most shorted out of the public sample in terms of percentage of publicly disclosed shorts.
The previously mentioned 10 disclosed shorts represent 12.4 percent of the company’s shares outstanding.
Market has found that demand to borrow the company’s shares stands at 19 percent of shares outstanding, indicating a significant amount of shorting activity that falls below the 0.5 percent threshold.
Other stocks with more than 5 percent of publicly disclosed short positions include FLSmidth & Co with 9.5 percent disclosed shares shorted, which compares to 17.8 percent of demand to borrow.
The company provides machinery to the mining and cement industry in Denmark.
Currently the firm is going through a restructuring coupled with a weak outlook for mining in the region. Goldman Sachs recently downgraded the company’s stock from “neutral” to a “sell”, according to Bloomberg reports.
Sainsbury’s has disclosed short positions of 7.3 percent, while total short interest data from Markit indicates a significantly higher 18.4 percent as midmarket retailers in the UK continue to lose market share, with German discount retailers continuing to grow.
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