The Short Report

Array
(
    [0] => Array
        (
            [0] => ((MPO))
            [1] => ((PBG))
            [2] => ((JBH))
            [3] => ((SGT))
            [4] => ((MTU))
            [5] => ((SCP))
            [6] => ((CAB))
            [7] => ((ALQ))
            [8] => ((GWA))
            [9] => ((ACR))
            [10] => ((OZL))
            [11] => ((HZN))
            [12] => ((PDN))
            [13] => ((VAH))
            [14] => ((UGL))
            [15] => ((MTS))
            [16] => ((BDR))
            [17] => ((HVN))
            [18] => ((NUF))
            [19] => ((BBG))
            [20] => ((COH))
            [21] => ((MQA))
            [22] => ((MSB))
            [23] => ((AWC))
            [24] => ((DJS))
        )

    [1] => Array
        (
            [0] => MPO
            [1] => PBG
            [2] => JBH
            [3] => SGT
            [4] => MTU
            [5] => SCP
            [6] => CAB
            [7] => ALQ
            [8] => GWA
            [9] => ACR
            [10] => OZL
            [11] => HZN
            [12] => PDN
            [13] => VAH
            [14] => UGL
            [15] => MTS
            [16] => BDR
            [17] => HVN
            [18] => NUF
            [19] => BBG
            [20] => COH
            [21] => MQA
            [22] => MSB
            [23] => AWC
            [24] => DJS
        )

)

This story features JB HI-FI LIMITED, and other companies.
For more info SHARE ANALYSIS: JBH
The company is included in 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 13, 2013.

After two or three weeks of pre result season stability, shorting activity spiked substantially last week. It was all about short-covering nevertheless, with only 3 short increases of one percentage point or more (not including ETFs and News Corp related instruments) meeting no less than 19 short decreases. We don't really have to go too far to guess why, nor spend much time analysing each stock's moves on a micro level. Last week saw the Australian stock market run up hard — very hard — which is unusual ahead of earnings season. And earnings season swung into full gear this week, likely prompting some shorters to take cover ahead of any surprises.

Two monthly short increases of 2ppt or more met 4 decreases, with no real surprises.
 

Weekly Short Increases

Shorts in Molopo Energy ((MPO)) increased to 1.65% from 0.18%

Molopo is not covered by FNArena database brokers.

Shorts in Pacific Brands ((PBG)) increased to 1.69% from 0.44%

Pacific Brands reported this week and a poor result saw its share tumble. Shorters got in ahead last week.

Shorts in JB Hi-Fi ((JBH)) increased to 13.53% from 12.50%

One day the perennial shorters of JB will win the day. After posting yet another upside surprise two weeks ago, the share price ran up and the shorters reassembled. And JBH is back up to number 7 on the Top 20 shorted list.

Weekly Short Decreases

Shorts in Singapore Telecom ((SGT)) decreased to 1.33% from 6.18%

Shorts in SingTel jumped up the week before ahead of what was a well-received quarterly result, sending the share price higher and forcing a short reduction.

Shorts in M2 Telecoms ((MTU)) decreased to 3.46% from 5.63%

M2 provided an update last week in which guidance was maintained.

Shorts in Shopping Centres Australasia ((SCP)) decreased to 4.22% from 6.22%

Shopping Centres’ share price ran up strongly last week ahead of this week’s positive result, forcing some short covering.

Shorts in Cabcharge ((CAB)) decreased to 9.54% from 11.13%

Cabcharge shorters have been rewarded in recent times but a spike last ahead of next week’s result appears to have involved some short-covering. CBA sits at 14 in the Top 20.

Shorts in ALS ((ALQ)) decreased to 6.37% from 7.86%

In a tough period for mining-related services, ALS has rallied this month with short-covering no doubt involved.

Shorts in GWA Group ((GWA)) decreased to 2.63% from 4.10%

GWA’s result this week was a miss but the stock ran up ahead of the release.

Shorts in Acrux ((ACR)) decreased to 7.34% from 8.79%

Acrux took a hit two weeks ago when the US FDA questioned testosterone treatments and has wallowed ever since.

Shorts in OZ Minerals ((OZL)) decreased to 2.92% from 4.24%

OZ threw a surprise 10c dividend into the mix last week with its result and yet again the stock spiked upward.

Shorts in Horizon Energy ((HZN)) decreased to 5.13% from 6.42%

Horizon posted a solid production report two weeks ago, providing the stock with a little boost.

Shorts in Paladin Energy ((PDN)) decreased to 8.24% from 9.52%

Paladin shares shot up after the announced sale of a stake in Langer Heinrich but quickly slipped again thereafter. Despite this reduction, PDN remains at 18 in the Top 20.

Shorts in Virgin Australia ((VAH)) fell to 2.04% from 3.27%

After plunging in January, Virgin found a little support in February on updated guidance.

Shorts in UGL ((UGL)) fell to 13.20% from 14.41%

Despite a little squaring up last week ahead of this week’s poor result, UGL is still sitting in the Top 20, at 9.

Shorts in Metcash ((MTS)) decreased to 11.61% from 12.81%

Metcash has been falling steadily all year and despite last week’s minor reduction, still sits at 11 in the Top 20.

Shorts in Beadell Resources ((BDR)) decreased to 3.96% from 5.15%

Beadell has been sneaking up ever since releasing positive production numbers late in January.

Shorts in Harvey Norman ((HVN)) decreased to 5.26% from 6.41%

Harvey doesn’t appear in the Top 20 these days (but was once an incumbent) and has rallied over the month ahead of next week’s result.

Shorts in Nufarm ((NUF)) decreased to 5.59% from 6.71%

The drought is a good reason why Nufarm has been weak this year but the stock has bounced in February.

Shorts in Billabong International ((BBG)) decreased to 1.28% from 2.40%

Having had a near death experience last year, Billabong disappeared off the Top 20 it was so accustomed to but the shares have rallied steadily ever since December.

Shorts in Cochlear ((COH)) decreased to 13.95% from 14.97%

Cochlear posted a weak result last week and tumbled but this reduction is minor for the number 6 stock in the Top 20.

Shorts in Macquarie Atlas Roads ((MQA)) decreased to 1.50% from 2.51%

Mac Atlas shares have shot up since announcing solid traffic stats and APRR contract formalisation late in January.

Monthly Short Increases

Shorts in JB Hi-Fi increased to 13.53% from 7.00%

See above.

Shorts in Mesoblast ((MSB)) increased to 6.28% from 3.88%

Meso reported some trial results in late January which were modestly positive but hardly convincing.

Monthly Short Decreases

Shorts in OZ Minerals decreased to 2.93% from 7.15%

See above.

Shorts in Cabcharge decreased to 9.54% from 12.99%

See above.

Shorts in Alumina ((AWC)) decreased to 3.77% from 6.05%

Alumina shares have rallied this month following a positive report from US mining partner Alcoa.

Shorts in David Jones ((DJS)) decreased to 5.40% from 7.49%

David Jones shares have rallied over the month ahead of its quarterly sales report, which ultimately was okay but not brilliant.

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