The Short Report – 01 Oct 2021

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Weekly reports | 10:35 am

This story features ANSARADA GROUP LIMITED and other companies. For more information, SHARE THE ANALYSIS: AND

See To guide below (for readers with full access).

Summary:

By Greg Peel

Week ending September 24, 2021.

If you are wondering why this week’s abbreviated report is Friday and not the usual Thursday excuses, but yesterday morning’s ASIC data had not been updated.

So strictly this report covers eight days, but we’ll probably come back to Thursday of next week.

Last week opened with the arrival of the Evergrande saga in the market and ended with a strong rally in the ASX200 before the Fed’s policy issues triggered the pullback again.

What emerges immediately from the table below is the sudden entry of the Ansarada group ((AND)) at 13% bypassed. One obvious assumption would be that the provider of the M&A SaaS platform announced a capital increase but without notice from ASX and without an update from Morgans – the only FNArena database broker covering the stock – since the company results last August, and nothing in the news. , I can not help you.

Otherwise, travel agents last week took off from the prospect of reopening state borders before Christmas, but as Webjet ((WEB)) shorts slipped to 8.9% from 9.9%, the Flight Center shorts ((FLT)) remained unchanged.

At the rate things are going, the reopening of borders is perhaps just a pipe dream.

I noted in last week’s report that all of the lithium miners took off the week before, resulting in short coverage at Piedmont Lithium ((PLL)). They’ve all seen a bit of a comeback since, but that hasn’t stopped Piedmont from dropping off the table shorted by more than 5% from 7.3%.

I also noted that Karoon Gas ((KAR)) appeared in the chart shorted over 5% ahead of its results last week, which then caused it to reappear.

Gold prices have also been rather volatile, as have short positions in Resolute Mining ((RSG)), which saw its short positions fall to 5.2% last week from 7.8%.

We did however welcome our old friend Bellevue Gold ((BGL)) at the bottom of the table, along with Omni Bridgeway ((OBL)) and Perenti Global ((PRN)).

And sharks keep circling around AGL Energy ((AGL)).

Weekly short positions as a percentage of market capitalization:

10% +
AND 13.4
FLT 11.0

In: AND

9.0-9.9

KGN, Z1P, EOS

Outside: THE WEB

8.0-8.9%

WEB, MSB, ING

In: THE WEB

7.0-7.9%

COE, RBL, TGR, AGL

In: AGL Outside: RSG, PLL, AMA

6.0-6.9%

AMA, A2M, TPW

In: AMA Outside: AGL

5.0-5.9%

BHP, PNV, BGL, OBL, RSG

In: RSG, BGL, OBL, PRN Outside: IVC, KAR

Movers and shakers

Nothing this week.

ASX20 short positions (%)

Coded Last week A week before Coded Last week A week before
ALL 0.1 0.1 MQG 0.2 0.3
ANZ 0.6 0.5 NAB 0.5 0.5
APT 1.0 1.1 MR 0.1 0.1
BHP 5.8 5.6 RIO 0.3 0.2
BXB 0.5 0.4 TCL 0.5 0.5
ABC 0.4 0.4 TLS 0.2 0.2
COLLAR 0.6 0.4 GB 0.6 0.5
CSL 0.2 0.1 WE S 0.3 0.2
GMF 1.7 1.9 WOW 0.2 0.2
GMG 0.1 0.1 WPL 1.6 1.6

To view the full full report, please click on this link

To guide:

The abridged report draws on data provided by the Australian Securities & Investment Commission (ASIC) to highlight significant weekly movements in recorded short positions in stocks listed on the Australian Securities Exchange (ASX). Short positions in exchange-traded funds (ETFs) and non-ordinary stocks are not included. Short positions below 5% are not included in the table below but may be noted in the accompanying text if deemed material.

Please take note of the important information provided at the end of this report. The percentages shown in this report refer to the percentage of ordinary shares issued.

Stock codes highlighted in green saw their short positions shrink within the week by an amount sufficient to move them into a lower percentage range. Stocks highlighted in red saw their short positions increase during the week by an amount sufficient to move them into a higher percentage range. Moves greater than one percentage point or more are discussed in the Movers & Shakers report below.

IMPORTANT INFORMATION ABOUT THIS REPORT

The above information is taken from daily reports published by the Australian Investment & Securities Commission (ASIC) and is provided by FNArena without qualification as a service to subscribers. FNArena would like to point out that immediate hypotheses cannot be drawn from the figures alone.

It is wrong to assume that the short percentages published by ASIC simply imply negative market positions held by fund managers or others seeking to profit from a decline in respective stock prices. While some or all of certain short percentages may indeed imply this, there are also a myriad of other reasons why a short position can be held that does not make that position “bare” given offsetting positions held elsewhere. Whatever balance of percentages actually constitutes a ‘short’ position, it would suggest that there are negative opinions about a stock held by some in the market and also suggest that if the flow of information about that stock suddenly becomes positive, a “short hedge” could trigger a short, sharp rally in that share price. However, short positions held as compensation for another position may turn out to be simply benign.

Often, large short positions can be attributed to a hybrid security listed on the same security where traders seek to “eliminate” the option value of the hybrid by offsetting the listed options and positions in the securities. Short positions can be part of a short stock portfolio offsetting a long stock price index (SPI) futures portfolio – a popular trade that seeks to exploit windows of opportunity when the SPI price trades at an excessive discount to fair value. Short positions may be held as a hedge by a brokerage firm providing Dividend Reinvestment Plan (DRP) underwriting services or other similar services. Short positions will sometimes need to be taken by market makers in listed equity exchange traded fund (EFT) products. All of the above are just a few of the reasons why a short position can be held in a stock, but can be considered benign in terms of the direction of the stock price due to offsets.

Equity options and equity index market makers will also hedge their portfolios using short positions if necessary. These delta hedges often form the other side of a client’s long put option protection trade, or perhaps a long equity call position (“buy-put”). “). In a clear example of how published short percentages can be misleading, an options market maker can hold a short position below the implied delta hedge level and this effectively implies a “long” position in that stock.

Another popular trading strategy is “pair trading” in which a stock is held short against a long position in another stock. Such positions seek to exploit perceived imbalances in the valuations of two stocks and involve a “net neutral” market position.

Aside from all of the above reasons why it would be a potential misconception to simply draw conclusions on short percentages, there are even broader questions to consider. The ASIC itself will admit that short position data is not an exact science given that it is the responsibility of market participants to report to their broker when positions are truly ‘short’. Without any suggestion of deception, there are always participants who ignore the rules. Spreads can also arise when short positions are held by a large investment bank offering multiple exchange services as well as proprietary trading activities. Such activity can introduce the possibility of non-counting or double counting when custodians are involved and beneficial ownership issues become unclear.

Finally, a simple fact is that the Australian Securities Exchange also maintains its own register of short positions. The numbers provided by ASIC and ASX at all times are not necessarily correlated.

FNArena offered this qualified explanation of the vagaries of short positions in equities as a warning to underwriters not to jump to conclusions or to make investment decisions based solely on these numbers without qualification. FNArena strongly suggests that investors seek advice from their stockbroker or financial advisor before acting on any of the information provided in this document.

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