The Short Report

Array
(
    [0] => Array
        (
            [0] => ((COH))
            [1] => ((NWS))
            [2] => ((MYR))
            [3] => ((MTS))
            [4] => ((FMG))
            [5] => ((AGO))
            [6] => ((UGL))
            [7] => ((PRY))
            [8] => ((MIN))
            [9] => ((CDD))
            [10] => ((ACR))
            [11] => ((BCI))
            [12] => ((ASL))
            [13] => ((MRM))
            [14] => ((MGX))
            [15] => ((VRT))
            [16] => ((WOW))
        )

    [1] => Array
        (
            [0] => COH
            [1] => NWS
            [2] => MYR
            [3] => MTS
            [4] => FMG
            [5] => AGO
            [6] => UGL
            [7] => PRY
            [8] => MIN
            [9] => CDD
            [10] => ACR
            [11] => BCI
            [12] => ASL
            [13] => MRM
            [14] => MGX
            [15] => VRT
            [16] => WOW
        )

)

This story features COCHLEAR LIMITED, and other companies.
For more info SHARE ANALYSIS: COH
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 moves in short positions registered on stocks listed on the Australian Securities Exchange (ASX). Short positions in exchange-traded funds (ETF) and non-ordinary shares are not included. Short positions below 5% are not included in the table below but may be noted in the accompanying text if deemed significant.

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.

Stock codes highlighted in green have seen their short positions reduce in the week by an amount sufficient to move them into a lower percentage bracket. Stocks highlighted in red have seen their short positions increase in the week by an amount sufficient to move them into a higher percentage bracket. Moves in excess of one percentage point or more are discussed in the Movers & Shakers report below.

Summary:

Please note: The ASIC Short Report on the FNArena website now appears to be updated by the regulator.

Week ending March 5, 2015.

The week in question took in the last couple of days of the February result season, and the beginning of the season aftermath. The result season ended with a spectacular fall from grace for Woolworths, but Woolies shorts have actually increased as a result. I have been noting an ongoing reduction in Cochlear ((COH)) shorts these past weeks, and the once top-of-the-table incumbent has now slipped into the 6% bracket. News Corp ((NWS)) was another longstanding 10% plus club member, but it has now slipped off the 5% plus table altogether.

But these were the only two stocks to see short reductions during the week. The results season saw a lot of reductions in short positions — some representing profit-taking but most representing short-covering — but this week we see the bulk of those earlier positions being re-established. There is an awful lot of red in our table this week.

An awful lot.

The 10% plus club had dropped down to a mere three but this week we're back to a more familiar eight. Four stocks were in the 10% bracket prior to the results season and have now returned, while Primary Healthcare, which has been steadily climbing for weeks, is the newcomer. Elsewhere there have been very big short position increases for the likes of Acrux, BC Iron, Ausdrill, MMA Offshore, Mt Gibson Iron and Virtus Health — two biotechs among iron ore miners and service providers suffering from the ever falling iron ore price.

The week in question saw the ASX200 topping out from its rally on Fed rate rise fears, and its been a volatile ride this past week. Next week's table will no doubt be interesting.
 

Weekly short positions as a percentage of market cap:

10%+

MYR   19.3
MTS    13.2
FMG   11.6
AGO   11.5
UGL    11.4
PRY    11.3
CDD   10.4
MIN    10.3

In: AGO, UGL, PRY, CDD, MIN

9.0-9.9%

ACR, KAR, PBG

In: ACR, KAR, PBG             Out: AGO, PRY, UGL

8.0-8.9%

MND, FLT, SXY, ORI, SGM, JBH, BCI, NXT, WHC, ALQ, ASL, MRM

In: SXY, ORI, BCI, ALQ, ASL, MRM                   Out: MIN, KAR, CDD, PBG

7.0-7.9%

MSB, KCN, JHC, MGX, SUL, DSH

In: MSB, MGX, DSH                        Out: ORI, SXY, ALQ, COH

6.0-6.9%

CAB, COH, WOW, ILU, RRL, NWH, VRT

IN: COH, WOW, ILU, NWH, VRT              Out: BCI, ASL, DSH

5.0-5.9%

ARI, TPI, BDR, TRS, AWE, GNC, SIR, VOC, TEN, IIN, KMD

In: BDR, TRS, AWE, GNC, SIR, VOC, TEN, IIN, KMD 

Out: MGX, WOW, NWH, MSB, MRM, NWS
 

Movers and Shakers

Where does one begin? There’s no point going into specific detail this week, given the sheer number of short increases. So here is a summary.

As the February reporting season came to an end only three stocks – Myer ((MYR)), Metcash ((MTS)) and Fortescue Metals ((FMG)) carried short positions in excess of 10%. With the season now done and dusted, Atlas Iron ((AGO)) and UGL ((UGL)) have returned to the 10% bracket from the 9% bracket along with Primary Healthcare ((PRY)), joining for the first time, while Mineral Resources ((MIN)) and Cardno ((CDD)) have returned from the 8% bracket.

Acrux ((ACR)) did not feature in our table last week, implying shorts of less than 5%, but this week is in the 9% bracket. BC Iron ((BCI)) has jumped into the 8% bracket from the 6% bracket, as has Ausdrill ((ASL)). MMA Offshore ((MRM)) has jumped into the 8% bracket from the 5% bracket.

Mt Gibson Iron ((MGX)) has risen to 7% from 5%, Virtus Health ((VRT)) to 6% from below 5%, and we might note that despite a big share price plunge, Woolworths ((WOW)) shorts have risen into the 6% bracket from the 5% bracket.
 

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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