The Short Report – 25 Nov 2021

Weekly Reports | Nov 25 2021

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

Summary:

By Greg Peel

Week Ending November 18, 2021.

Last week was another weak one for the ASX200, as the Australian market failed to find any traction despite strength on Wall Street. There was some angst over RBA rhetoric, and the index is still struggling through this week.

A bit of shuffling of the deck chairs among stocks shorted 5% or more last week, with only two stocks posting changes in short position of one percentage point or more. One is Kirkland Lake Gold ((KLA)), and we recall from last week’s Report:

“One exception is Kirkland Lake Gold ((KLA)), which jumped to 21.9% shorted from 9.3% and which we can completely ignored.  The Canadian-based miner is listed in three countries, thus opening up occasional geographic arbitrage opportunities. It could well disappear off the table next week.”

It didn’t, but it did drop to 17.9%.

The other is online furniture & homewares retailer Temple & Webster ((TPW)), which saw its shorts rise to 7.6% from 5.9%. As a lockdown winner, T&W’s share price started sliding on November 1 – the day Sydney was reopened, and then Melbourne was reopened soon after.

Are the glory days over?

Another stock to note is BHP Group ((BHP)), which has been quietly climbing the table and is now at an unfamiliar 7.1% shorted. It’s not a play on the iron ore price, nor anything else sinister, but rather a reflection on BHP moving closer to the end of its UK dual listing as well as the de-merger of its Petroleum division in a scrip-swap with Woodside Petroleum ((WPL)).

Such share register disruptions provide opportunities to play a risk arbitrage. BHP will likely revert back to its low level of shorts once the whole ball game is completed.

We also welcomed a newbie last week, in the form of Appen ((APX)) at 5.4% shorted. See below.

Weekly short positions as a percentage of market cap:

10%+
KLA    17.9
FLT     12.7
KGN   11.7
RBL    10.8


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