Tick-tick-tick-tick short selling boom
26 May 2016 London
Image: Shutterstock
Established watchmakers are failing to re-define their brands in world dominated by smartphones, while emerging wearable technology products are still struggling to win over sceptical consumers, according to Markit’s latest research.
Markit’s data showed spike in short interest for traditional Swiss watchmakers such as Richemont, which owns the Cartier and Montblanc brands, and Swatch, along with international competitors in the US and Asia.
Richemont has seen its short interest rise twofold over the past year, hitting a multi-year high of 6 percent at the end of Q1 2016, according to Markit.
The luxury brand group saw its watch division’s sales growth stall and profit margins decline, from 23.4 percent to 16 percent over the last year.
Richemont acknowledged the mixed results, stating it was “doubtful that any meaningful improvement in the trading environment is to be expected” in the near term.
At the same time, Swatch saw record high levels of short interest of 32.3 percent in January, while its stock declined by more than 50 percent over the past three years.
Markit noted that short sellers have taken profits in 2016 and covered 40 percent of positions as the stock slid a further 11 percent.
US watchmaker Fossil Group also saw its share price drop by 65 percent in the past 12 month, and another 30 percent in the first week of May, leading to up to a fifth of the company’s shares being short sold.
Classic watchmakers have been beset on all sides by the rise of technology in recent years, but the advent of the Apple Watch in 2015, and more recently FitBit, which was billed by many as the most direct disruptive technology, failed to attract significant numbers of users.
This trend is reinforced by the regular appearance of other wearable technologies such as GoPro on top hot stocks list for short sellers, along with the discontinuation of Google Glass.
FitBit shares have fallen since rallying after its initial public offering and now are 71 percent down from initial highs. Short sellers in turn are utilising 13.6 percent of shares outstanding on loan.
Markit’s data showed spike in short interest for traditional Swiss watchmakers such as Richemont, which owns the Cartier and Montblanc brands, and Swatch, along with international competitors in the US and Asia.
Richemont has seen its short interest rise twofold over the past year, hitting a multi-year high of 6 percent at the end of Q1 2016, according to Markit.
The luxury brand group saw its watch division’s sales growth stall and profit margins decline, from 23.4 percent to 16 percent over the last year.
Richemont acknowledged the mixed results, stating it was “doubtful that any meaningful improvement in the trading environment is to be expected” in the near term.
At the same time, Swatch saw record high levels of short interest of 32.3 percent in January, while its stock declined by more than 50 percent over the past three years.
Markit noted that short sellers have taken profits in 2016 and covered 40 percent of positions as the stock slid a further 11 percent.
US watchmaker Fossil Group also saw its share price drop by 65 percent in the past 12 month, and another 30 percent in the first week of May, leading to up to a fifth of the company’s shares being short sold.
Classic watchmakers have been beset on all sides by the rise of technology in recent years, but the advent of the Apple Watch in 2015, and more recently FitBit, which was billed by many as the most direct disruptive technology, failed to attract significant numbers of users.
This trend is reinforced by the regular appearance of other wearable technologies such as GoPro on top hot stocks list for short sellers, along with the discontinuation of Google Glass.
FitBit shares have fallen since rallying after its initial public offering and now are 71 percent down from initial highs. Short sellers in turn are utilising 13.6 percent of shares outstanding on loan.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
