High borrow costs stifle North American short interest
09 September 2016 London
Image: Shutterstock
North America’s most expensive stocks to borrow have underperformed for a fourth consecutive month, according to IHS Markit.
The Markit North American Total Cap universe revealed that over August the highest priced stocks to borrow trailed the rest of the market by 0.77 percent. The year-to-date performance for this group is also down 3.4 percent.
According a recent IHS Markit research note on North American short sellers, this underperformance largely came in the past three months as short sellers "hit a rough patch between February and April which saw their high conviction positions rebound strongly from their lows".
IHS Markit also highlighted in the research note that this negative performance is only relative as the surging equity market has carried the shares seeing the most bearish short sentiment up 0.7 percent during August and 8.1 percent for the year so far.
The stagnant precious metals market was pinpointed by IHS Markit as a key driver behind the underperformance of high cost to borrow shares as 13 of the sector’s constituents which feature in study group have fallen by 11.6 percent on average over August.
In its research note, IHS Markit revealed: “The lack of appetite to let successful short positions ride has been a recurring theme among August’s high conviction short positions as these shares have seen their average short interest decline by 4.5 percent over August, which is twice the average covering seen across the entire Markit North American Total Cap universe.”
The Markit North American Total Cap universe revealed that over August the highest priced stocks to borrow trailed the rest of the market by 0.77 percent. The year-to-date performance for this group is also down 3.4 percent.
According a recent IHS Markit research note on North American short sellers, this underperformance largely came in the past three months as short sellers "hit a rough patch between February and April which saw their high conviction positions rebound strongly from their lows".
IHS Markit also highlighted in the research note that this negative performance is only relative as the surging equity market has carried the shares seeing the most bearish short sentiment up 0.7 percent during August and 8.1 percent for the year so far.
The stagnant precious metals market was pinpointed by IHS Markit as a key driver behind the underperformance of high cost to borrow shares as 13 of the sector’s constituents which feature in study group have fallen by 11.6 percent on average over August.
In its research note, IHS Markit revealed: “The lack of appetite to let successful short positions ride has been a recurring theme among August’s high conviction short positions as these shares have seen their average short interest decline by 4.5 percent over August, which is twice the average covering seen across the entire Markit North American Total Cap universe.”
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