The Short Report

Array
(
    [0] => Array
        (
            [0] => ((NWS))
            [1] => ((JBH))
            [2] => ((MYR))
            [3] => ((MTS))
            [4] => ((FLT))
            [5] => ((AWE))
            [6] => ((STO))
        )

    [1] => Array
        (
            [0] => NWS
            [1] => JBH
            [2] => MYR
            [3] => MTS
            [4] => FLT
            [5] => AWE
            [6] => STO
        )

)

This story features NEWS CORPORATION, and other companies.
For more info SHARE ANALYSIS: NWS
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 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:

Week ending September 19, 2015.

Last week saw the ASX200 attempt to struggle back to the 5200 mark once more before being hit by the Fed non-decision which sparked yet another leg down towards 5000, which we subsequently reached again this week (4998 to be precise). As we’re up again today, we are yet to break out of the post-correction 5000-5200 range despite all the day to day volatility.

There’s a lot more red than green across our 5% plus table today but mostly only representing minimal bracket creep, and a lot of stocks that crept down the week before crept up again. One exception is News Corp ((NWS)), which has fallen out our 5% plus table from a previous 6.3%.

Having jumped back into the 10% plus club the week before, JB Hi-Fi ((JBH)) slipped out again last week, but only just. Otherwise all the newcomers remain in place. There has been some movement within the table, with Myer shorts reducing and Flight Centre shorts increasing but little change besides.

Indeed, Myer shorts fell by a full 2.8 percentage points but this still wasn’t enough to shift the shorters’ favourite out of second spot.
 

Weekly short positions as a percentage of market cap:

10%+

MTS    21.3
MYR   18.0
CAB    16.9
SGH    15.9
MND   14.9
ORI     14.4
FLT     13.6
MIN    13.3
DSH    11.9
MRM  11.9
PRY    11.5
UGL    11.1
GEM   10.8
SUL    10.4
WOR   10.3
CDD   10.0

Out: JBH

9.0-9.9%

JBH, AWE, STO, GXL, SEK, FMG
 
In: JBH, AWE, GXL, SEK, FMG              Out: MGX                             

8.0-8.9%

MGX, AWC, GWA, WOW, PRG, ALQ, MSB

In: MGX, MSB                       Out: AWE, GXL, SEK, FMG, KAR

7.0-7.9%

KAR, ARI, KCN, NWH, PDN, NEC, BKN

In: KAR, PDN                        Out: MSB

6.0-6.9%

JHC, IVC, SGN, SXY, WHC, RRL, SPO, RFG, SGM, NVT, TFC, IGO

In: IVC, SXY, RRL, SPO, RFG, SGM, NVT, TFC, IGO    Out: PDN, NWS

5.0-5.9%

WSA, NXT, AAD, FXL, SWM, VOC, CAR, AAC, ILU, IMF, CVO, NST, TEN, DLS, CQR

In: WSA, AAD, IMF, NST, CQR                

Out: IVC, RFG, SPO, SXY, RRL, SGM, IGO, TFC, NVT, IFL

Movers and Shakers

Myer ((MYR)) has sat at either number one or two on our most shorted table for months now alongside Metcash ((MTS)), with daylight third. Even a 2.8ppt drop in Myer shorts last week to 18.0% from 20.8% could not shift the department store from the silver position.

There is no clear reason as to why Myer shorts were reduced – since tanking on its FY15 result release early in the month the stock has gone nowhere and there has been no new news.

Flight Centre ((FLT)) has been among the high-flyers of the 10% elite club for a while now and moved to a new cruising altitude last week with a 2.0ppt gain to 13.6% from 11.6%, moving the stock into seventh spot. Again, no new news has been forthcoming and the stock hasn’t moved much.

However, brokers have decided the benefit Flight Centre gleans from increased inbound travel thanks to a lower Aussie dollar does not overcome outbound business lost, and as the Aussie weakens this point is likely not lost on the shorters.

Our special mention this week goes to quieter achiever AWE ((AWE)). The energy sector junior has been very gradually moving up our table over the past weeks and last week made it into the 9% bracket for the first time with a 1.7ppt bump up in shorts to 9.8%.

AWE is often among brokers’ preferred second tier energy stocks which has likely provided share price support and thus fodder for those backing further oil price weakness. Interestingly, AWE finds itself right next to major peer Santos ((STO)), another recent table creeper.

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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