There have been some very interesting and large moves by the short sellers over the past week.
While traders reduced their shorts in DUET group by more than 50%, they piled into its peer Ausnet Services which saw an increase of more than 200% in short positions in the stock over the past week.
That big move in Ausnet was indicative of some huge increases from traders taking the short side of a number of well-known stocks last week. Nine of the 10 biggest increases in shorts were of more than 100% with Tabcorp seeing a 309% increase in shorts – clearly off a small base but instructive none the less.
AMP saw an increase of 154% as the stock hit its lowest level since March in the past week while traders have increased their shorts in CSR by 148% as it spiked to the high of the year near $4.
The moves weren’t quite so exciting on the other side of the ledger, with the reductions in shorts far more muted.
Bluescope Steel’s rally may have played a role in the 30% reduction in short positions held in that stock. That’s something that it has in common with Cochlear which saw a 19% rally in its share price as the almost unrelenting move from the March low continued.
Here are the top 10 stocks by percentage decrease and increase in short positions.
Stocks of the week
Tabcorp Holdings (TAH): Angus Nicholson, IG’s Melbourne-based market strategist, said Tabcorp Holdings came under heavy shorting pressure suggesting “investors clearly had a strong view that the stock did not warrant its recent A$4.50 valuation”.
“Tabcorp is still Australia’s largest betting operator, but increasing competition in the betting space has begun to crimp on further revenue growth,” Nicholson said. It’s why the company is trying to put together a deal with “New Zealand’s state-owned TAB betting agency”.
But the increase in shorts suggests either the deal won’t be done or won’t have a material and positive impact on earnings, Nicholson said.
DUET Group (DUE): The rally in DUET has been unrelenting since April and has gone almost parabolic in the past six days as the share price has climbed from $2.36 to $2.505 this morning.
Nicholson says this reflects the reality that “a steady dividend-paying utility firm, such as DUET, has benefitted from rising volatility in markets in the lead up to the Brexit referendum vote”.
But Nicholson believes some of the fall in shorts is related to the latest surge in the share price which has squeezed shorts out of the stock.
“DUET’s purchase of Origin Energy’s Cullerin wind farm certainly seems to have been strongly welcomed by investors,” he said.
While the company’s plan “to purchase other mid-sized windfarms that fall within the 20 MW to 120 MW range and its renewed focus on wind also may be driving investor buying” with the hope that “whether the LNP or Labor Party win at the upcoming federal election, government support for renewable energy is set to increase from the Abbott era,” he said.
You can follow Angus on Twitter: @ANicholson_IG