Shares in retailer Harvey Norman are still in decline, but short positions in the stock have actually fallen in recent weeks.
The moves were pointed out by leading share market commentator Richard Coppleson as part of his daily “Coppo Report”.
Harvey Norman’s share price has been under pressure since the company reported half-year earnings on February 28, and the stock plummeted by 12.4% to $4.01.
At the time, company founder Gerry Harvey responded by saying the market had simply got it wrong.
However, Coppleson said that when companies experience sharp price declines on reporting day, “that is a huge sign…SELL straight away”.
Shares in the company have continue to slide since reporting day, but as Coppleson points out, “one thing Gerry can’t do is ‘blame the shorts’.”
The blue line in the chart below shows the percentage of HVN shares outstanding in which investors have short positions.
And that number has fallen to 8.3%, from 9.4% on February 28:
So it appears other factors are weighing on the stock, with lingering doubts about the health of some of its franchise stores and the looming threat of global competition in Australia’s retail sector.
Based on the price-action since HVN reported its half-year results, the company clearly has work to do to convince the market it represents a stable long-term value proposition.
HVN shares fell by another 3% today to close at a three-year low of $3.40.