Markit’s most shorted
02 February 2015 London
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Markit has compiled a global list of the most shorted stocks that are due to release earnings in the week beginning 26 January.
In North America, oil and gas, energy and healthcare are dominating the firms seeing highest short interest ahead of earnings in the US.
Analyst at Markit, Relte Schutte, commented: “Whereas record low oil prices explain why many oil and energy firms are struggling, healthcare may be being punished for performing too well as the sector was one of the top performers in 2014 and is currently up almost 30 percent over the last 12 months.”
Despite this, online security, data and marketing firm Neustar is the most shorted ahead of earnings with 34 percent of shares outstanding out on loan. The company helps corporates prevent hacks and threats on websites such as Twitter.
The stock has seen a significant increase in short interest growing by 127 percent over the last year. Although the stock enjoyed a strong 15 percent run in 2013, but fell by 26 percent over the last 12 months.
Concerns over the company’s future gained attention in 2013 as 48 percent of its revenue was derived from a single, highly profitable business contract that came under scrutiny.
The contract involved the management and running of the entire US phone registry database—a function known as the Local Number Portability Administrator. On 29 January 2014 the company announced that it was notified that its proposal for the next contract term would not be considered.
Myriad Genetics, which develops and markets molecular diagnostic products, has also been selected by Markit after losing a court ruling in the US Appeals court.
The ruling decided that the company cannot block competitors from conducting similar DNA tests. It also mentioned that those patents granted for the Myriad tests should have never been issued in the first place.
Myriad currently has 33 percent of shares outstanding on loan and the share price is up 11 percent over the past year.
Third most shorted in the US is ARC group, a specialised manufacturing and 3D printing company.
The company’s share price is down by 65 percent to $8.22 since peaking at $23 in September 2014.
Short sellers have increased positions however, with shares outstanding on loan increasing by 30 percent since September 2014 to stand at 32 percent currently.
The top two most heavily shorted companies in Europe ahead of earnings are oil and gas service providers TGS and SBM Offshore, with 20 percent and 18 percent of shares outstanding on loan respectively.
TGS is a Norwegian based geophysical services provider to the oil and gas industry while SBM provides offshore services to the global oil and gas industry.
Schutte said: “Companies which service the oil and gas industries continue to struggle against low crude oil prices as major and minor energy firms alike continue to cut capital expenditure expansion and look to contract certain operations and decrease supply.”
Asian consumer and electronics manufacturers are again seeing high levels short interest ahead of earnings.
Sharp has seen a 19 percent increase in short sellers in the past month, as shares outstanding on loan reached 14 percent. The company guided profit down in January 2015 and cited competition from Asian rivals driving prices down and the weaker Japanese yen for the disappointing results.
In North America, oil and gas, energy and healthcare are dominating the firms seeing highest short interest ahead of earnings in the US.
Analyst at Markit, Relte Schutte, commented: “Whereas record low oil prices explain why many oil and energy firms are struggling, healthcare may be being punished for performing too well as the sector was one of the top performers in 2014 and is currently up almost 30 percent over the last 12 months.”
Despite this, online security, data and marketing firm Neustar is the most shorted ahead of earnings with 34 percent of shares outstanding out on loan. The company helps corporates prevent hacks and threats on websites such as Twitter.
The stock has seen a significant increase in short interest growing by 127 percent over the last year. Although the stock enjoyed a strong 15 percent run in 2013, but fell by 26 percent over the last 12 months.
Concerns over the company’s future gained attention in 2013 as 48 percent of its revenue was derived from a single, highly profitable business contract that came under scrutiny.
The contract involved the management and running of the entire US phone registry database—a function known as the Local Number Portability Administrator. On 29 January 2014 the company announced that it was notified that its proposal for the next contract term would not be considered.
Myriad Genetics, which develops and markets molecular diagnostic products, has also been selected by Markit after losing a court ruling in the US Appeals court.
The ruling decided that the company cannot block competitors from conducting similar DNA tests. It also mentioned that those patents granted for the Myriad tests should have never been issued in the first place.
Myriad currently has 33 percent of shares outstanding on loan and the share price is up 11 percent over the past year.
Third most shorted in the US is ARC group, a specialised manufacturing and 3D printing company.
The company’s share price is down by 65 percent to $8.22 since peaking at $23 in September 2014.
Short sellers have increased positions however, with shares outstanding on loan increasing by 30 percent since September 2014 to stand at 32 percent currently.
The top two most heavily shorted companies in Europe ahead of earnings are oil and gas service providers TGS and SBM Offshore, with 20 percent and 18 percent of shares outstanding on loan respectively.
TGS is a Norwegian based geophysical services provider to the oil and gas industry while SBM provides offshore services to the global oil and gas industry.
Schutte said: “Companies which service the oil and gas industries continue to struggle against low crude oil prices as major and minor energy firms alike continue to cut capital expenditure expansion and look to contract certain operations and decrease supply.”
Asian consumer and electronics manufacturers are again seeing high levels short interest ahead of earnings.
Sharp has seen a 19 percent increase in short sellers in the past month, as shares outstanding on loan reached 14 percent. The company guided profit down in January 2015 and cited competition from Asian rivals driving prices down and the weaker Japanese yen for the disappointing results.
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