The Short Report

Array
(
    [0] => Array
        (
            [0] => ((GUD))
            [1] => ((ALQ))
            [2] => ((ASL))
            [3] => ((SGT))
            [4] => ((ACR))
            [5] => ((LEI))
            [6] => ((BDR))
            [7] => ((SDL))
            [8] => ((ISU))
            [9] => ((NST))
            [10] => ((TRS))
            [11] => ((PRU))
            [12] => ((JBH))
            [13] => ((OZL))
        )

    [1] => Array
        (
            [0] => GUD
            [1] => ALQ
            [2] => ASL
            [3] => SGT
            [4] => ACR
            [5] => LEI
            [6] => BDR
            [7] => SDL
            [8] => ISU
            [9] => NST
            [10] => TRS
            [11] => PRU
            [12] => JBH
            [13] => OZL
        )

)

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, February 6, 2013.

With the results season only just ramping last week short activity was relatively subdued and stock specific. Mining companies are still seeing movements in the wake of their production reports while an FDA scare for Acrux has shot it into the Top 20 at 17. Acrux and GUD Holdings ((GUD)) replaced ASL ((ALQ)) and Ausdrill ((ASL)) at the bottom end of the table following last week's moves. Weekly short increases of one percentage point or more numbered four last week with pre-result positions building in SingTel and Leighton, while five decreases were posted including shorters cashing in on The Reject Shop's profit warning.

Monthly increases of 2ppt or more numbered three to one decrease, with JB Hi-Fi again proving popular with the shorters pre-result (which did not provide a positive surprise this time) and OZ Minerals shorts still dropping after the production report surprise (since backed up by a similar FY result surprise).
 

Weekly Short Increases

Shorts in Singapore Telecom ((SGT)) increased to 6.18% from 3.62%

SingTel is a popular shorter’s stock with positions fluctuating on a regular basis despite a lack of news flow. This likely suggests a pairs play against other telcos, perhaps one big one in particular, and with SGT’s result pending it appears positions are being set once more.

Shorts in Acrux ((ACR)) increased to 8.79% from 6.91%

Last week the US FDA announced it was investigating the safety of testosterone replacement therapies, leading to a solid drop in the Acrux share price. The shorters have stepped up the pressure.

Shorts in Leighton Holdings ((LEI)) to 7.84% from 6.70%

Leighton is soon to report its earnings and the company has a track record of negative surprises. No FNArena database broker rates the stock a Buy.

Shorts in Beadell Resources ((BDR)) increased to 5.15% from 4.07%

Prior to last week Beadell released a quarterly production report which disappointed on grades. The shorters have stirred although brokers are still positive on BDR and its strong cash generation.

Weekly Short Decreases

Shorts in Sundance Resources ((SDL)) decreased to 1.80% from 6.12%

Shorts in Sundance built up over the previous month but dropped last week following the company’s announcement of infrastructure tenders received for its significant iron ore development.

Shorts in iSelect ((ISU)) decreased to 0.13% from 2.51%

iSelect’s share price fell in the week in question ahead of this week’s announcement the company had signed an agreement with a large motor insurance panel provider. Perhaps the shorters cashed in.

Shorts in Northern Star Resources ((NST)) decreased to 0.26% from 2.13%

Northern’s share price shot up last week in the wake of the previously announced second significant acquisition from Barrick Gold.  Short covering probably helped.

Shorts in The Reject Shop ((TRS)) decreased to 5.82% from 7.15%

Reject’s share price continued to wallow after the big profit warning the week before which saw short positions jump. Some positions have been cashed in.

Shorts in Perseus Mining ((PRU)) decreased to 1.61% from 2.91%

Perseus has been frustrating the shorters who are likely backing the chance the company needs to raise more funds to finance its projects. A solid quarterly report had then on the back foot.

Monthly Short Increases

Shorts in JB Hi-Fi ((JBH)) increased to 12.50% from 7.58%

Top 20 stalwart JB Hi-Fi saw shorts building up yet again ahead of the company’s result release last week. Often a dangerous play, this time the shorters did well given JBH failed to deliver once of its customary upside surprises (while still posting a laudable result).

Shorts in Acrux increased to 8.79% from 6.72%

See above.

Shorts in Singapore Telecom increased to 6.18% from 4.16%

See above.

Monthly Short Decreases

Shorts in OZ Minerals ((OZL)) decreased to 4.24% from 7.34%

OZ Minerals delivered a surprisingly positive quarterly report a couple of weeks ago which it has since followed up this week with an equally well-received full-year result. We will perhaps see more short covering in the numbers next week.

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.

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

Click to view our Glossary of Financial Terms