The Short Report

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            [0] => ((MSB))
            [1] => ((OZL))
            [2] => ((NWS))
            [3] => ((AGO))
            [4] => ((NUF))
            [5] => ((MTU))
            [6] => ((IMF))
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            [0] => MSB
            [1] => OZL
            [2] => NWS
            [3] => AGO
            [4] => NUF
            [5] => MTU
            [6] => IMF
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)

This story features MESOBLAST LIMITED, and other companies.
For more info SHARE ANALYSIS: MSB
The company is included in 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 23, 2013.

The shorters appear disinclined to take risky positions into the result season, given activity has all but dried up on a weekly basis. Last week saw only one weekly short increase of one percentage point or more and one decrease. Stem cell biotech Mesoblast continues to attract short attention while OZ Minerals' production report significantly surprised to the upside.

There were four monthly short increases of 2ppt or more last week to one decrease. Atlas iron continues to attract attention on a weaker iron ore price while the hot weather is impacting on Australian agri stocks.

There was little movement in the Top 20 last week, with News Corp-related shares and ETFs still leading the table but irrelevant to actual shorting activity while retail-exposed stocks and mining services mostly fill out the places.

Weekly Short Increases

Shorts in Mesoblast ((MSB)) increased to 5.51% from 3.08%

In December Meso published some positive trial results but January has brought nothing but volatility for the stock, including a steep fall and sharp bounce in the week in question. News came through of a substantial shareholding taken up by an LA-based investment company. The shorters may not have faith in MSB’s stem cell products.

Weekly Short Decreases

Shorts in OZ Minerals ((OZL)) decreased to 5.49% from 6.88%

OZ released a December quarter production report during the period which surprised all and sundry to the upside, sparking a big share price jump and some pain for the shorters.

Monthly Short Increases

Shorts in News Corp ((NWS)) increased to 16.61% from 12.87%

News continues to feature on the shorts list as a function of demerger and share consolidation processes.

Shorts in Atlas Iron ((AGO)) increased to 9.17% from 6.41%

Atlas is highly leveraged to the iron ore price, which fell steadily over the week in question and has raised concerns over more falls to come.

Shorts in Nufarm ((NUF)) increased to 6.06% from 3.86%

Nufarm’s fortunes are inexorably linked to the weather in Australia and the recent heat wave across the country does not augur well for crops and weed spray.

Shorts in M2 Telecommunications ((MTU)) increased to 5.34% from 3.16%

M2 has had nothing new to say this month but its shares have risen and fallen on market volatility. A 2013 high flyer, M2 is a fair target for the shorters.

Monthly Short Decreases

Shorts in Bentham IMF ((IMF)) decreased to 1.93% from 4.66%

IMF is the Australian arm of a US litigation business and is not covered by brokers in the FNArena database, although one popular investment advisor gave the stock a thumbs up during the month.

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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