Homebuilders hammered by short sellers
19 September 2016 London
Image: Shutterstock
Homebuilders have been singled out by short sellers in the week of their earnings announcements, according to IHS Markit.
US retail construction firms KB Home and Lennar topped IHS Markit’s list of highly-shorted firms with 21.8 percent and 5.7 percent of shares out on loan, respectively.
According to IHS Markit, both firms have seen constantly elevated levels of short interest since the financial crisis but shorting interest has dropped off in recent weeks.
“The covering accelerated in the wake of buoyant earnings from fellow homebuilder Toll Brothers which saw its shares jump significantly after announcing better than expected order volumes," explained Simon Colvin, research analyst at Markit, in a research note.
“While the covering indicates that investors are less bearish on both firms in recent weeks, KB Home still has over twice the level of shorting activity it did at the start of the year.”
KB Home suffered a 15 percent dropoff in its share price after it was revealed it had missed delivery targets in its Q4 earnings results. IHS Markit noted that although the firm has since recovered from this fall the shorting interest it picked up along the way remains high.
The research note also highlighted German real estate property company Immofinanz as the only other firm seeing more than 5 percent of its shares shorted leading up to earnings this week.
Immofinanz has a large exposure to Russia and Eastern Europe which has made it a popular short in the last couple of years, according to IHS Markit.
US retail construction firms KB Home and Lennar topped IHS Markit’s list of highly-shorted firms with 21.8 percent and 5.7 percent of shares out on loan, respectively.
According to IHS Markit, both firms have seen constantly elevated levels of short interest since the financial crisis but shorting interest has dropped off in recent weeks.
“The covering accelerated in the wake of buoyant earnings from fellow homebuilder Toll Brothers which saw its shares jump significantly after announcing better than expected order volumes," explained Simon Colvin, research analyst at Markit, in a research note.
“While the covering indicates that investors are less bearish on both firms in recent weeks, KB Home still has over twice the level of shorting activity it did at the start of the year.”
KB Home suffered a 15 percent dropoff in its share price after it was revealed it had missed delivery targets in its Q4 earnings results. IHS Markit noted that although the firm has since recovered from this fall the shorting interest it picked up along the way remains high.
The research note also highlighted German real estate property company Immofinanz as the only other firm seeing more than 5 percent of its shares shorted leading up to earnings this week.
Immofinanz has a large exposure to Russia and Eastern Europe which has made it a popular short in the last couple of years, according to IHS Markit.
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