Deutsche Bank securities lending roundup
24 December 2014 London
Image: Shutterstock
Research teams at Deutsche Bank have revealed the securities lending trends from the final quarter of 2014, including a positive spin on an automotive crisis.
Short interest in Takata Corporation, a Japanese automotive safety systems supplier, reached a record high in December 2014, according to the research.
This high was on account of a recent air-bag crisis, which has caused shares to decrease over 50 percent during the year.
Short interest increased 152 percent over the month with 3.03 million shares sold short. Currently short interest stands at 12 percent of outstanding shares.
The US National Highway Traffic Safety Administration warned the company it may levy fines unless the company expands the recall to the rest of the US, an additional 8 million US vehicles (current recall is for high
humidity states only).
Recently, Takata executives refused the regulator’s request to expand the recall, a move that could have further negative effects on the share price.
Elsewhere, GoPro announced on 10 November that it would issue up to 10 million shares in a shelf offering.
Deutsche Bank stated: “For a name that had been one of the most sought after for prospective shorts and the most expensive on our book (trading over 100 percent fee prior to the offering), this was welcome news.”
“The new stock settled into the market on 10 November and, thus far, we haven’t seen close to 10 million shares of liquidity. While stock has circled around, enabling rates to fall to around 70 percent, liquidity remains a concern as short demand still greatly outpaces borrow supply.”
In a month with positive returns for the S&P500, the solar industry struggled in November.
Of the highly shorted solar names, SolarCity Corporation was the most located of November.
Down over 14 percent since the beginning of October, Deutsche Bank stated that short interest rose from 14 million shares to more than 18 million, as of 3 December.
During that time, the vast majority of inexpensive borrow was taken down, leaving one expensive institutional lender and broker boxes with stock.
Consequently, rates went from around 2 percent on average to nearly 4 percent with spot rates as high as 6 percent.
SolarCity had been primarily a convert hedge on the short side, but the price action brought about significant demand from both the directional and quantitative trading communities.
Other names that the trend in solar affected in the borrow market are ReneSola, Jinkosolar Holding Company, SunPower Corporation, and Yingli Green Energy Holding Company.
Short interest in Takata Corporation, a Japanese automotive safety systems supplier, reached a record high in December 2014, according to the research.
This high was on account of a recent air-bag crisis, which has caused shares to decrease over 50 percent during the year.
Short interest increased 152 percent over the month with 3.03 million shares sold short. Currently short interest stands at 12 percent of outstanding shares.
The US National Highway Traffic Safety Administration warned the company it may levy fines unless the company expands the recall to the rest of the US, an additional 8 million US vehicles (current recall is for high
humidity states only).
Recently, Takata executives refused the regulator’s request to expand the recall, a move that could have further negative effects on the share price.
Elsewhere, GoPro announced on 10 November that it would issue up to 10 million shares in a shelf offering.
Deutsche Bank stated: “For a name that had been one of the most sought after for prospective shorts and the most expensive on our book (trading over 100 percent fee prior to the offering), this was welcome news.”
“The new stock settled into the market on 10 November and, thus far, we haven’t seen close to 10 million shares of liquidity. While stock has circled around, enabling rates to fall to around 70 percent, liquidity remains a concern as short demand still greatly outpaces borrow supply.”
In a month with positive returns for the S&P500, the solar industry struggled in November.
Of the highly shorted solar names, SolarCity Corporation was the most located of November.
Down over 14 percent since the beginning of October, Deutsche Bank stated that short interest rose from 14 million shares to more than 18 million, as of 3 December.
During that time, the vast majority of inexpensive borrow was taken down, leaving one expensive institutional lender and broker boxes with stock.
Consequently, rates went from around 2 percent on average to nearly 4 percent with spot rates as high as 6 percent.
SolarCity had been primarily a convert hedge on the short side, but the price action brought about significant demand from both the directional and quantitative trading communities.
Other names that the trend in solar affected in the borrow market are ReneSola, Jinkosolar Holding Company, SunPower Corporation, and Yingli Green Energy Holding Company.
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