The Short Report – 04 Jun 2020

Weekly Reports | Jun 04 2020

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

Week ending May 28, 2020

Last week saw the ASX200 kick on with its reopening rally, aided by strength on Wall Street. As I write the index has broken through 6000.

There is a fair amount of green and red on the table below, but mostly red, confirming that April’s short-covering scramble had by end-May shifted back towards short position increases. It suggests a contrarian play against rising (possibly over-) exuberance. The total number of 5%-plus shorted stocks has slightly risen.

That said, the 10%-plus club has now reduced to a mere three (not counting Speedcast, in administration) with the exit of lithium miner Orocobre ((ORE)), previously a long term, top-of-the-table incumbent (albeit to 9.9%).

Only two stocks moved by one percentage point or more, one being Webjet ((WEB)), to 9.4% from 6.3%. Both Webjet and Flight Centre ((FLT)) had been early shorter favourites before each raising new capital, but both are moving their way back up once more.

In contrast, Corporate Travel Management ((CTD)) is slipping down the list, suggesting a possible pairs trade (long-short).

In another juxtaposition, JB Hi-Fi ((JBH)) is slipping down while Harvey Norman ((HVN)) is on the rise again.

The other stock to move by a percentage point was Zip Co ((Z1P)), to 7.0% from 8.0%. Zip has since rallied 77%, having completed a full takeover of US peer QuadPay. Watch this space.

Weekly short positions as a percentage of market cap:

MYR   13.8
GXY   12.2
SUL    11.1

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