Weekly reports | 11:19 a.m.
This story features BETMAKERS TECHNOLOGY GROUP LIMITED and other companies. For more information STOCK ANALYSIS: BETTING
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By Greg Peel
Week ending October 13, 2022.
Last week, the ASX200 was relatively flat in the wake of falling US jobs data, until the shock reversal in the US CPI.
Two moves in short position stand out from last week, but not in magnitude.
Shorts in Betmakers Technology ((BET)) rose to 14.3% from 13.9% the previous week. Last Tuesday, Betmakers jumped 15.6%.
On the other hand, Megaport’s shorts ((MP1)) rose from 9.8% to 10.0%. Yesterday, Megaport fell -22.1%.
Otherwise, we note that the past week has been very quiet for short position moves. All of the moves were additions nonetheless, and four stocks joined or rejoined the chart in the 5% bracket.
Lithium/graphite explorer/developer Sayona Minning ((SYA)) continues to climb the rankings.
Among the additions, we note that Tyro Payments ((TYR)) is in takeover talks with Westpac ((WBC)).
Boral ((BLD)) peer Adbri ((ABC)) issued a profit warning on Monday and fell -21.7%.
Weekly short positions as a percentage of market cap:
PPT, NAN, MFG, BRG
ING, ZIP, KGN, TPW, PNV, SYA, DEG
92E, IEL, VUL, BRN, CCX, BGL, APX, NXT, BOQ, WEB, CUV
PBH, ASM, RRL, AWC, JBH, EVN, NVX, PNI, ADH, GOR, TYR, BLD, FFX, JHG, PME
In: TYR, BLD, JHG, SME
Movers and Shakers
Nothing this week.
ASX20 short positions (%)
|Coded||Last week||A week before||Coded||Last week||A week before|
To see the full short report, please click on this link
The abridged report draws on data provided by the Australian Securities & Investment Commission (ASIC) to highlight significant weekly movements in recorded short positions in stocks listed on the Australian Securities Exchange (ASX). Short positions in exchange-traded funds (ETFs) and non-common stocks are not included. Short positions below 5% are not included in the table below but may be noted in the accompanying text if deemed material.
Please note the important information provided at the end of this report. The percentages given in this report refer to the percentage of ordinary shares issued.
Stock codes highlighted in green saw their short positions decline over the week by an amount sufficient to move them into a lower percentage range. Stocks highlighted in red saw their short positions rise over the week by enough to move them into a higher percentage range. Moves greater than a percentage point or more are discussed in the Movers & Shakers report below.
IMPORTANT INFORMATION ABOUT THIS REPORT
The above information is derived from daily reports issued by the Australian Investment & Securities Commission (ASIC) and is provided by FNArena without qualification as a service to subscribers. FNArena would like to point out that immediate hypotheses cannot be drawn from the figures alone.
It is wrong to assume that the short percentages published by ASIC merely imply negative market positions held by fund managers or others seeking to profit from a decline in respective stock prices. While some or all of some short percentages may indeed imply this, there are also myriad other reasons why a short position could be held, which does not make this position “naked” given the offsetting positions held elsewhere. . Regardless of the balance of the percentages, a “short” position would suggest that there are negative views on a stock held by some in the market and would also suggest that if the news flow on that stock suddenly turned positive, the ” short hedge” could trigger a short and sharp rally in this stock price. However, short positions held as an offset to another position may just be benign.
Often, large short positions can be assigned to a listed hybrid security in the same security, where traders seek to “strip” the option value of the hybrid by offsetting listed options and equity positions. Short positions can be part of a portfolio of short stocks offsetting a portfolio of long equity price index (SPI) futures – a popular trade that seeks to exploit windows of opportunity when the price of the SPI is trading at an excessive discount to fair value. Short positions may be held as cover by a brokerage that provides subscription services for dividend reinvestment plans (DRPs) or other similar services. Short positions will sometimes need to be taken by market makers in exchange-traded fund (ETF) products. All of the above are just a few of the reasons why a short position may be held in a stock, but may be considered benign in terms of the direction of the stock price due to offsets.
Equity and stock index options market makers will also hedge their portfolios using short positions if necessary. These delta hedges often form the other side of a client’s long protective long stock put option position, or perhaps a long short stock call option position (” buy-write”). In a clear example of how published short percentages can be misleading, an options market maker may hold a short position below the implied delta hedge level and this actually implies a “long” position in that stock.
Another popular trading strategy is “pair trading” in which one stock is held short against a long position in another stock. Such positions seek to exploit perceived imbalances in the valuations of two stocks and imply a “net neutral” market position.
Besides all the above reasons why it would be a potential misconception to simply jump to conclusions about short percentages, there are even broader issues to consider. ASIC itself will admit that data on short positions is not an exact science given that it is up to market participants to tell their broker when positions are truly “short”. Without any suggestion of deception, there are always participants who ignore the rules. Discrepancies can also arise when short positions are held by a large investment bank offering multiple exchange services as well as proprietary trading activities. Such activity can introduce the possibility of undercounting or double counting when custodians become involved and beneficial ownership issues become unclear.
Finally, a simple fact is that the Australian Securities Exchange also maintains its own register of short positions. The numbers provided by ASIC and ASX at any time are not necessarily correlated.
FNArena offered this qualified explanation of the vagaries of short stock positions as a warning to subscribers not to jump to conclusions or make investment decisions based solely on these unqualified numbers. FNArena strongly suggests that investors seek advice from their stockbroker or financial advisor before acting on any information provided herein.
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