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US: Short interest soars in Instructure (INST) ahead of
earnings on Monday
EU: Shorts add to Gea Group and take some gains in AIXA
Asia: Surging short demand for Samsung Electro-Mechanics
Looking to the last week of October, there have been some minor
changes in positioning for the most shorted stocks, but much like
the rest of the market, the reaction to the sell-off on the part of
short-sellers has been somewhat muted. This makes sense given the
price action following sell-offs in recent years, which has
prompted the mindset of arriving late and leaving early when short
selling, particularly in the US.
In that vein, both B&G Foods and Diebold Nixdorf, which both
report this week, have seen marginal upticks in equity short demand
over the last couple weeks, however short interest remains well
below YTD highs. While equity shorts marginally reduced positions,
there was a significant covering in the bonds issued by both firms
during the quarter.
Given the relative underperformance of both firms' equity shares
YTD, the net covering in the quarter combined with a small punt
into the earnings reports suggest equity short sellers don't see a
significant upside risk, even if after the stocks have traded down.
Shares of DBD are down 67% since they last reported, while BGS
shares are down only 14%.
Instructure, a Salt Lake City based online learning firm, also
struggled in the quarter with shares down 28% since the firm
reported Q2 results on July 30th. Short sellers added to their
positions throughout the quarter and put on a further 1.7m shares
in just the last two weeks.
Europe
Looking at highly shorted stocks reporting earnings in Europe
this week, short sellers have continued to move away from Aixtron,
with short interest decreasing from a peak of 20% of shares
outstanding on August 15th, down to the current level of
16.2% ahead of earnings on Tuesday. During that span, the share
price has declined over 25%. Short exposure remains elevated, with
AIXA in the top 20 most shorted EU stocks. With the shares already
60% below the YTD peak observed in March, there has been little
desire to press on short positions as shares hit 52-week low on
October 24th.
Gea Group has seen a marginal uptick in shorts in recent weeks,
while the share price has declined over 25% from the Q3 peak in
early August, and is another case of shorts sticking with positions
but refraining from adding in a significant way on share price
weakness.
Asia
Short-sellers have added to positions aggressively in Samsung
Electro-Mechanics ahead of their earnings report on October
31st. So far in October, the short position has
increased from 2.5% of free float to 15.5%, an increase of just
over 7m shares. In that time the share price has decreased by
18.8%. Translated to USD terms, the short position has grown from
$171m to $911m, despite the decline in share price.
While less extreme, short sellers have also increased positions
in the Samsung Electronics parent company as well as Samsung
Biologics, with the latter having the larger percentage of free
float short (10%) and the larger nominal short balance ($570m).
Posted 29 October 2018 by Sam Pierson, Director, Securities Finance
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