The Short Report – 31 Oct 2019

Weekly Reports | Oct 31 2019

See Guide further below (for readers with full access).

Summary:

Week ending October 24, 2019

Ongoing US-China trade optimism and positive US earnings reports had the ASX200 rallying choppily last week. There was a bit more action in terms of short position changes last week but only a couple of particular note.

Firstly I’ll note shorts in Kirkland Lake Gold ((KLA)) fell to 10.1% last week from 14.5%, which does not detract from my theory US hedge funds sold the stock in Australia to get ahead of sellers in the US.

Bank of Queensland ((BOQ)) shorts jumped to 12.1% from $10.9%. See below.

Nearmap ((NEA)) shorts rose to 10.3% from 8.4%. This should thus qualify as a “Mover & Shaker”, but for the fact it is unclear why the shorters are putting the boot in. There has been no news out of the company recently and no updates from FNArena database brokers. As a tech stock Nearmap tends to move with the Nasdaq, but selling took hold last week in the midst of the WiseTech Global controversy, which has nothing to do with Nearmap.

We might simply note that tech high-flyers – pardon the pun in this case – do occasionally fall into holes following a period of over-exuberance.

One stock to note ahead of next week’s Report is Costa Group ((CGC)). Last week Costa shorts fell to 8.6% from 9.1% ahead of this week’s profit warning and announcement of a heavily discounted capital raising, which saw the stock drop -28%. Someone went a little early there.

And we might also note this week has seen some big rallies for lithium miners, due to protests in Chile. Short-covering would explain a lot of it, given two of them are numbers one and two on the table.

Weekly short positions as a percentage of market cap:

10%+
SYR    17.6
GXY   16.9
ORE    14.5
ING     13.8
NXT    13.6
GWA  12.5
JBH     12.3
BOQ   12.1
SDA    10.7
DMP   10.6
HUB   10.3
NEA    10.3
BIN     10.2    
KLA    10.1


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