The short report – July 21, 2022

Weekly reports | 11:30 AM

This story features LAKE RESOURCES NL and other businesses. For more information STOCK ANALYSIS: LKE

See Guide below (for readers with full access).

Summary:

By Greg Peel

Week ending July 14, 2022.

Last week, the ASX200 dipped and recovered before a sharp fall the following day on weakness in commodity prices, followed by a rally led by Wall Street.

Last week I highlighted the number of gold miners in the chart shorted by more than 5%, but there continues to be action among exotics as well.

Lakeland Resources ((LKE)), a lithium explorer/developer in Argentina, saw its shorts climb to 9.0% last week from 7.6%.

Last week, Deep Yellow ((DYL)), a uranium explorer/developer with interests in Namibia, debuted at the bottom of the chart. As Deep Yellow resurfaced, it was replaced by another newbie, 92 Energy ((92E)), which is exploring for uranium in Canada.

Since you are wondering, 92 is the atomic number of uranium.

Uranium producer Paladin Energy ((PDN)) remains short 6.9%.

Nothing else to report this week other than that we are starting to see some relief for travel agents as travel demand returns. Of course, all of that could flip again in the blink of an eye, with omicron going wild, but Flight Center ((FLT)) shorts have quietly declined, now at 15.3% vs. 16.0% last year. previous week, and Webjet ((WEB)) slipped to 7.5% from 8.0%.

Weekly short positions as a percentage of market cap:

10%+
FLT 15.3
BET 11.9
SQ2 11.3
NNA 11.2

No change

9.0-9.9

EML, LKE

In: EML, LKE Out: RRL

8.0-8.9%

RRL, PNV

In: RRL Out: EML, THE WEB

7.0-7.9%

KGN, CXO, WEB, ZIP, CCX, ING

In: THE WEB, CCX Out: LKE, ESM

6.0-6.9%

PDN, SBM, VUL, MSB, CUV, BGL, IEL, ADH, TPW, OBL, MP1

In: ESM Out: CCX, PBH

5.0-5.9%

PNI, NHC, PBH, NEA, DEG, BOQ, AMA, APX, FFX, MFG, IMU, ANN, SYR, 92E

In: PBH, 92E Out: SME, DYL

Movers and shakers

Everything covered above.

ASX20 short positions (%)

Coded Last week A week before Coded Last week A week before
EVERYTHING 0.3 0.3 NAB 0.5 0.5
ANZ 0.5 0.4 MR 0.4 0.5
BHP 0.2 0.2 Rio 0.5 0.7
ABC 0.9 0.8 STO 0.2 0.3
COLLAR 0.7 0.6 TCL 0.5 0.5
CSL 0.4 0.3 TLS 0.1 0.1
FMG 1.4 1.4 UK 1.2 1.2
GMG 0.7 0.8 WDS 0.7 1.0
JHX 0.4 0.4 WE S 0.7 0.6
MHQ 0.4 0.4 WOW 0.5 0.6

To see the full short report, please click on this link

Guide:

The abridged report draws on data provided by the Australian Securities & Investment Commission (ASIC) to highlight significant weekly movements in recorded short positions in stocks listed on the Australian Securities Exchange (ASX). Short positions in exchange-traded funds (ETFs) and non-common stocks are not included. Short positions below 5% are not included in the table below but may be noted in the accompanying text if deemed material.

Please note the important information provided at the end of this report. The percentages given in this report refer to the percentage of ordinary shares issued.

Stock codes highlighted in green saw their short positions decline over the week by enough to move them into a lower percentage range. Stocks highlighted in red saw their short positions rise over the week by enough to move them into a higher percentage range. Moves greater than a percentage point or more are discussed in the Movers & Shakers report below.

IMPORTANT INFORMATION ABOUT THIS REPORT

The above information is derived from daily reports issued by the Australian Investment & Securities Commission (ASIC) and is provided by FNArena without qualification as a service to subscribers. FNArena would like to point out that immediate hypotheses cannot be drawn from the figures alone.

It is wrong to assume that the short percentages published by ASIC simply imply negative market positions held by fund managers or others looking to profit from a decline in the respective stock prices. While some or all of some short percentages may indeed imply this, there are also a myriad of other reasons why a short position could be held, which does not make this position “naked” given the offsetting positions held elsewhere. . Regardless of the balance of the percentages, a “short” position would suggest that there are negative views on a stock held by some in the market and would also suggest that if the news flow on that stock suddenly turned positive, the “ short hedge” could trigger a short, sharp rally in the stock price. However, short positions held as an offset to another position may just be benign.

Often, large short positions can be assigned to a listed hybrid security in the same security, where traders seek to “strip” the option value of the hybrid by offsetting listed options and equity positions. Short positions can be part of a portfolio of short stocks offsetting a portfolio of long equity price index (SPI) futures – a popular trade that seeks to exploit windows of opportunity when the price of the SPI is trading at an excessive discount to fair value. Short positions may be held as cover by a brokerage that provides subscription services for dividend reinvestment plans (DRPs) or other similar services. Short positions will sometimes need to be taken by market makers in exchange-traded fund (ETF) products. All of the above are just a few of the reasons why a short position may be held in a stock, but may be considered benign in terms of the direction of the stock price due to offsets.

Equity and stock index options market makers will also hedge their portfolios using short positions if necessary. These delta hedges often form the other side of a client’s long equity put option protection trade, or perhaps a long equity short call position (“buy-write “). 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 this actually implies a “long” position in that stock.

Another popular trading strategy is “pair trading” in which one stock is held short against a long position in another stock. Such positions seek to exploit perceived imbalances in the valuations of two stocks and imply a “net neutral” market position.

Besides all of the above reasons why it would be a potential misconception to simply jump to conclusions about short percentages, there are even broader issues to consider. ASIC itself will admit that data on short positions is not an exact science given that it is up to market participants to tell their broker when positions are truly “short”. Without any suggestion of deception, there are always participants who ignore the rules. Discrepancies can also arise when short positions are held by a large investment bank offering multiple exchange services as well as proprietary trading activities. Such activity can introduce the possibility of undercounting or double counting when custodians become involved and beneficial ownership issues become unclear.

Finally, a simple fact is that the Australian Securities Exchange also maintains its own register of short positions. The numbers provided by ASIC and ASX at any time are not necessarily correlated.

FNArena offered this qualified explanation of the vagaries of short stock positions as a warning to subscribers not to jump to conclusions or make investment decisions based solely on these unqualified numbers. FNArena strongly suggests that investors seek advice from their stockbroker or financial advisor before acting on the information provided herein.

Find out why FNArena subscribers appreciate the service so much: “Your opinions (Thank you)” – Please note that this story contains shamelessly positive feedback on the service provided.

FNArena is proud of its track record and its past achievements: Ten years later

Click to see our glossary of financial terms

About Arla Lacy

Check Also

Ascendis Stock: Institutional Buy Values ​​ASND Best-Now Cap-Gain Prospect

Pgiam/iStock via Getty Images Investment theme The most important portfolio goal for most investors is …