SHORT STACK: APN News and Media has had a big build-up in shorts

Photo: Joe Raedle/Getty Images

There’s plenty of movement again on the short side of the share registry for some well known Australian stocks.

Data provided by IG markets shows APN News and Media has had a significant build up in shorts, which has increased close to 219% over the course of the past week. That’s an incredible move, but one that likely reflects “APN Media‚Äôs recent divestment of its New Zealand media assets”, Angus Nicholson, market strategist at IG in Melbourne told Business Insider.

Last week the company announced it was planning to sell its Australian newspaper division to News Corp for $36.6 million. The competition watchdog, the ACCC, is planning to hold a public inquiry into the deal.

But Nicholson said he expects that even with this big lift in short positions “the stock is likely to still find favour with investors after the repricing given that management has stated it will return to paying dividends and commit to a 60% payout ratio.”

St Barbara Limited (see below) also had a big lift in shorts of 74%, while Aristocrat Leisure’s inability to break up and through its recent range top seems to have emboldened some shorts with Nicholson saying recent elevated prices means “elements of the investor community appeared to be placing bets that this was starting to get a bit too high”. Aristocrat has seen shorts increase by 65% over the past week.

As has been the case in recent weeks, the reductions on overall shorts are by much smaller margins than the big increase in stock shorts.

Once again Duet is one of the top reductions, with Nicholson saying the “safe haven rally in utilities” has again seen shorts cut their positions. The rally in Evolution mining also seems to have caught shorts short as the stock hit its highest level since 2003.

Stocks of the Week:

St Barbara Ltd (SBM.AX): The gold price hit $A1856 on Friday in the wake of the Brexit vote as the Aussie dollar fell toward 73 cents and gold spiked to $US1358 an ounce. That drove the St Barbara stock price back too, but just shy of the recent high at $3.06 with a peak Friday at $3.05.

That double top, and the fact that it was the highest level since May 2008, seems to have encouraged the bears to come out of the woods, with Angus Nicholson saying the stock had a 74% increase in shorts, which seems to “reflect its recent bullish run alongside gold prices, and that out of all the ASX gold miners it is the one that is starting to look the most ahead of its earnings forecasts”.

It’s still in a strong uptrend but for the moment the shorts clearly think prices are headed lower.

St Barbara Ltd Daily – SBM.AX (Reuters Eikon)

Aristocrat Leisure (ALL.AX): A casual observer looking at the recent price moves in ALL would likely conclude that Aristocrat has put in a range top at $13.58. That appears to have emboldened the bears. But the strong bounce off $12.80 will worry them a little although it is likely to take a break of the recent high to see the shorts capitulate.

Aristocrat Leisure Daily – ALL>AX (Reuters Eikon)

And here is the list of the big movers.

Source: IG, ASX

You can follow Angus on Twitter: @ANicholson_IG

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