The Short Report

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        (
            [0] => ((TSE))
            [1] => ((AGO))
            [2] => ((ALQ))
            [3] => ((ASL))
            [4] => ((NWS))
            [5] => ((SDL))
            [6] => ((FGE))
            [7] => ((MGR))
            [8] => ((CQR))
            [9] => ((ISU))
            [10] => ((BKN))
            [11] => ((VET))
            [12] => ((UGL))
            [13] => ((NWS))
            [14] => ((DSH))
            [15] => ((KCN))
        )

    [1] => Array
        (
            [0] => TSE
            [1] => AGO
            [2] => ALQ
            [3] => ASL
            [4] => NWS
            [5] => SDL
            [6] => FGE
            [7] => MGR
            [8] => CQR
            [9] => ISU
            [10] => BKN
            [11] => VET
            [12] => UGL
            [13] => NWS
            [14] => DSH
            [15] => KCN
        )

)

This story features ALS LIMITED, and other companies.
For more info SHARE ANALYSIS: ALQ
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

Guide:

The Short Report draws upon data provided by the Australian Securities & Investment Commission (ASIC) to highlight significant weekly and monthly moves in short positions registered on stocks listed on the Australian Securities Exchange (ASX).

Please take note of the Important Information provided at the end of this report. Percentage amounts in this report refer to percentage of ordinary shares on issue.

Summary:

Period: Week to, and month to, January 9, 2013.

It's been three weeks since FNArena produced a Short Report (holiday break) so there have been a few changes in the list of stocks attracting short interest, as well as some notable lack of change. The News Corp rationalisation goes on, and for the most part can be ignored on the Top 20 table (see below). SSO, still there, is a small cap ETF which will be part of a long/short play. Beyond that, another ETF has fallen out of the Top 20 since before Christmas, as has Transfield Services ((TSE)), and, most notably, old shorters' favourite Kingsgate Consolidated. Gold has been holding its own. The three "new" faces (at least two saw Top 20 listings last year), are iron ore junior Atlas Iron ((AGO)), minerals tester ALS ((ALQ)) and mining service provider Ausdrill ((ASL)), which sit at 17, 19 and 20 on the list respectively.

There was (that we care about) one weekly short increase last week of one percentage point or more and six short decreases. There were five monthly short increases of 2ppt or more and two decreases. Forge Group has leapt into the action, unsurprisingly, and no doubt shorters are in for a rollicking time. Also of interest are newcomers Vocation and Dick Smith, both of which listed only last month.
 

Weekly Short Increases

Shorts in News Corp ((NWS)) increased to 16.62% from 14.93%

We start 2014 where we left off in 2013, with the rationalisation of the News Corp suite of post-demerger A and B shares still playing out. Shorts in NWSLV sit at 47% and FOXLV at 20% which is not about a negative view. Shorts in the demerged NWS are also involved in this process although a pairs trade against FOX is also potentially in play.

Weekly Short Decreases

Shorts in Sundance Resources ((SDL)) decreased to 1.03% from 5.57%

You have to be butch to invest in Sundance and this iron ore developer in Cameroon and the Congo is not covered by FNArena brokers, but share price weakness continued into 2014, perhaps allowing for short profit-taking.

Shorts in Forge Group ((FGE)) decreased to 4.73% from 6.75%

You have to be certifiable to play in Forge since the profit warning in November saw the shares drop from over $4.00 to 28c in a blink on the assumption it was all over. It wasn’t, hence a rally to $1.70, which is where the shorters moved in. We’re back at $1.00 but this week’s new write downs combined with confirmed funding leaves this company in the balance.

Shorts in Mirvac Group ((MGR)) decreased to 0.18% from 2.20%

Mirvac purchased some new assets in early November using debt and the share price took a bit of a hit, but by the week in question had staged a comeback which probably scared off he shorts.

Shorts in Charter Hall Retail ((CQR)) decreased to 2.57% from 4.15%

Retail REITs struggled towards year end – a time when all attention turns to Christmas retail sales – but have regained ground since. With hopes for retail a little higher in 2014, the shorts have eased.

Shorts in iSelect ((ISU)) decreased to 0.20% from 1.67%

Shares in this online insurance comparison service fell solidly from August to November until Credit Suisse – the only FNArena broker covering the stock – issued a report suggesting it didn’t understand the weakness and maintained an Outperform rating. Ever since then, the stock has rallied.

Shorts in Bradken ((BKN)) decreased to 10.80% from 12.13%

As a mining service provider, Bradken has been a Top 20 shorted regular for some time now. There’s always some fiddling around the edges of this substantial short position (number 12 in the Top 20 this week).

Monthly Short Increases

Shorts in Forge Group increased to 4.73% from 0.58%

The action in Forge post profit warning all happened within a month, hence while the monthly numbers show this increase to 4.7%, last week’s action (see above) indicate the short interest reached at least as high as 6.7% before reducing.

Shorts in Vocation ((VET)) increased to 4.43% from 1.01%

Vocation – a vocational education provider – was one of a raft of new listings to hit the ASX board last month just as the market was having Fed taper wobbles. The share price has since kicked, perhaps enticing in genuine shorters or pairs traders (Navitas?).

Shorts in UGL ((UGL)) increased to 13.20% from 10.47%

UGL is a company many think is missing a Y but since the company proposed a demerger the shorts have moved in for a break-up play against the sum of the new parts. UGL is currently number 7 in the Top 20.

Shorts in News Corp ((NWS)) increased to $16.62% from 14.41%

See above.

Shorts in Dick Smith Holdings ((DSH)) increased to 2.47% from 0.40%

Dick Smith is another December IPO stock which has since rallied above its initial trading price, on an improved retail outlook. Dick offers up some great pairs trading opportunities, particularly against the likes of JB Hi-Fi.

Monthly Short Decreases

Shorts in Kingsgate Consolidated ((KCN)) decreased to 5.17% from 14.79%

Kingsgate had been a permanent member of the Top 20 club ever since the gold price collapse, with shorters’ bloodlust fed by the company’s bold expansion plans and funding uncertainty. Gold has more recently held its ground, the share price has recovered from its lows. Suddenly KCN has disappeared out of the Top 20 altogether, suggesting there may have been one big shorter out there.

Shorts in Sundance Resources decreased to 1.03% from 4.23%

See above.

Top 20 Largest Short Positions

To see the full Short Report, please go to this link

IMPORTANT INFORMATION ABOUT THIS REPORT

The above information is sourced from daily reports published by the Australian Investment & Securities Commission (ASIC) and is provided by FNArena unqualified as a service to subscribers. FNArena would like to make it very clear that immediate assumptions cannot be drawn from the numbers alone.

It is wrong to assume that short percentages published by ASIC simply imply negative market positions held by fund managers or others looking to profit from a fall in respective share prices. While all or part of certain short percentages may indeed imply such, there are also a myriad of other reasons why a short position might be held which does not render that position “naked” given offsetting positions held elsewhere. Whatever balance of percentages truly is a “short” position would suggest there are negative views on a stock held by some in the market and also would suggest that were the news flow on that stock to turn suddenly positive, “short covering” may spark a short, sharp rally in that share price. However short positions held as an offset against another position may prove merely benign.

Often large short positions can be attributable to a listed hybrid security on the same stock where traders look to “strip out” the option value of the hybrid with offsetting listed option and stock positions. Short positions may form part of a short stock portfolio offsetting a long share price index (SPI) futures portfolio – a popular trade which seeks to exploit windows of opportunity when the SPI price trades at an overextended discount to fair value. Short positions may be held as a hedge by a broking house providing dividend reinvestment plan (DRP) underwriting services or other similar services. Short positions will occasionally need to be adopted by market makers in listed equity exchange traded fund products (EFT). All of the above are just some of the reasons why a short position may be held in a stock but can be considered benign in share price direction terms due to offsets.

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

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

Aside from all the above reasons as to why it would be a potential misconception to draw simply conclusions on short percentages, there are even wider issues to consider. ASIC itself will admit that short position data is not an exact science given the onus on market participants to declare to their broker when positions truly are “short”. Without any suggestion of deceit, there are always participants who are ignorant of the regulations. Discrepancies can also arise when short positions are held by a large investment banking operation offering multiple stock market services as well as proprietary trading activities. Such activity can introduce the possibility of either 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 keeps its own register of short positions. The figures provided by ASIC and by the ASX at any point do not necessarily correlate.

FNArena has offered this qualified explanation of the vagaries of short stock positions as a warning to subscribers not to jump to any conclusions or to make investment decisions based solely on these unqualified numbers. FNArena strongly suggests investors seek advice from their stock broker or financial adviser before acting upon any of the information provided herein.

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