Short Stories

Vineyard National Bancorp

Vineyard National Bancorp (VNBC), the financial holding company, who had 20% of their Market Cap out on Loan to short investors (%MCOL) in early October 2007, now has 10.2% MCOL. Although this is obviously an increase of 100%, the short interest in this stock did decrease to 3% in early April (please click to enlarge graph). The recent rise is in line with the company's announcement of a loss of $16.6m for the first quarter, compared with net earnings of $5.5m for the same quarter last year.

Utilisation is at 76%, and there are 18 Days to Cover. The average Utilisation for the rest of the Russell2000 is 34%, and for the rest of the North America Banks it is 22%. Indymac Bancorp (IMB) has 40.62% MCOL, Downey Financial (DSL) has 31.59%, Washington Mutual (WM) has 29.37%, and the Bank of Montreal (BMO) has 25.44%.

Barratt is not as bad as expected...

Barratt Developments (BDEV), the UK housebuilder, offered some much needed relief to the battered housebuilding sector today, as it reported reservations down by only one third since the start of the year and eschewed a widely rumoured rights issue to strengthen its balance sheet. Net private reservations for the year were down 33.6 per cent against 2007 (FT.com).

It is clear to see from this graph (please click to enlarge) that short sellers correctly predicted Barratt's results were not set to be as bad as the market may have initially estimated, with the percentage of the company's Market Cap out on Loan (%MCOL) to short investors, decreasing from 18.7% on April 7th to 12.57% today.

Alliance & Leicester

Alliance & Leicester (AL) today revealed a sharp fall in unsecured personal lending and a slowdown in its mortgage business in the first four months of the year, as the UK bank revealed the costs related to the credit market downturn soared. (FT.com)

It is clear to see from this chart the sharp rise in the percentage of AL's Market Cap that is out on loan to short investors, and moreover the dramatic increase around the time of the credit crunch late last summer. However it does look (please click to enlarge) as though investors came to the trade late because the share price really started to drop in September before short positions started to increase later on that month. Utilisation is at 64%, and has decreased from 73% in December. There are 19 Days to Cover. The average Utilisation for the rest of the FTSE 100 is 7.7%, and for the rest of the EMEA Banks it is 20.8%.

Management Consultants et al.

Accenture Ltd (ACN), the New York based management consultancy service, has seen a significant rise in short interest in the last eight to nine months. In October 2007, the company, who specialise is technology sector, had just 1% of its Market Cap on Loan (%MCOL) to short investors. By January this year, it had 3.8% MCOL, although since then investors have begun to close out their positions as the price starts to rise. There are 13 Days to Cover for those who wish to buy back shares and take profits. Utilisation is at only 8%, so there is still plenty left to borrow. The average Utilisation for the rest of the US Small Caps is 18%, and for the rest of the North America Software Services it is 12%; in fact the sector in general has remained between 9% and 12% Utilised, which is a very low percentage, for the past two years.

Equifax (EFX), another global provider of solutions for businesses and consumers (which includes credit reports for those seeking to obtain mortgages etc), has also seen a rise in its short interest; from 4% in October 2007 5.6% today. Utilisation is at 24%, and there are 17 Days to Cover. The average Utilisation for the rest of the S&P500 is 7%, and for the rest of the North America Consumer Services and Supplies it is 15%, although this sector has increased 50% in the past two years.

Administaff (ASF),  who provide Personnel Management Systems including benefits and payroll administration, has  9.3% MCOL, with 28% Utilisation. There are 13 Days to Cover. The average Utilisation for the rest of the Russell2000 is 35%, and it is also a member of the Consumer Supplies Sector.

Information Services Group Inc (III), who provide fact-based sourcing advisory services, has 13% MCOL, up from 10% last October. It is 52% Utilised, and is also issuing a convertible bond for January 2011.   

Carphone Warehouse

Carphone Warehouse (CPW) is making daily front page news, and here is the short side data: Currently 15.62% of CPW's shares are on loan, up from 14% in December and down from 16.25% in mid-March (please click to enlarge graph). Utilisation has decreased from 86% in mid-February to 74% today, as the share price rebounds from 230p in late April to 280p today. Interestingly, there are 32 Days to Cover for those investors who want to buy back shares and take profits. Carphone is no longer at the top of the retail short interest tree. HMV (HMV), Sainsbury (SBRY) and DSG (DSGI) all have between 36% and 25% of their Market Caps on Loan respectively. The average Utilisation for the rest of the EMEA Retailing sector is 29%. The only other stock that is in the top five most borrowed retail stocks in Europe is the German Small Cap stock Hawesko (HAW), who sell wines and champagnes. With 27% of their Market Cap out on Loan, perhaps the credit crunch is dissuading city folk away from luxurious drinking.

Best Buy (BBY), who are paying Charles Dunstone's company £1.1bn for a 50% stake in the European Consumer Electronics Venture, has also seen short interest decrease since March, when the %MCOL was 11%. It is now 8.5%, with Utilisation at 33%. The average Utilisation for the rest of the S&P500 is 7%, and for the rest of the North America Retailing Sector it is 23%.

Joint Corp

Joint Corp (8874), the Japan-based real estate property trader, has become the target of short investors this side of 2008. In January, the percentage of the company's Market Cap out on Loan (%MCOL) to short investors was 2%, it then increased to 8% last week, and is now at 7%, with a slight upturn in the past day. As you can see from this graph, although short sellers came to the trade relatively late, they would have made considerable profits since the start of the year when they started to increase their positions. This percentage is high for an Asian stock, and although the Utilisation is quite big at 63%, it is unusual for an Asian stock to have 37% left to borrow with a %MCOL above 5%. For instance, Cfs Corp (8229), another Japanese Small Cap Stock, has a %MCOL of 1.7%, but it is 90% Utilised. The average Utilisation for the rest of the Japan Small Caps is 13%, for the rest of the Japan Real Estate Sector of which Joint Corp is a member, it is 7%.

Banca Italease and JC Flowers

U.S private equity fund JC Flowers & Co is thought to be interested in acquiring the Italian leasing and factoring company Banca Italease Spa (BIL), said Forbes said this morning. BIL's share price hit a two-year low on April 12th at 5.1EUR, and it has since rebounded to 7EUR per share, potentially because the whiff of a private equity rumour started to spread amongst investors.

There has been a general increase in borrowing BIL in the past 8 - 9 months, and in last August the company had 1.7% of its Market Cap out on Loan to Short Investors as opposed to 6% last month. Unsurprisingly, shorts are now being covered and this figure has dropped to 3.5%. There are only 0.99 Days to Cover for those investors who believe that now is the time to buy back shares and take profits.

Short interest at 2-year low in Yahoo!

Surprisingly, there has been barely any short interest in Yahoo! (YHOO) in the past month. You will see from this graph that the percentage of Yahoo's Market Cap out on Loan (%MCOL) to short investors has decreased from 6% to 1% since October 2006, perhaps because even the most savvy of investors believed the bid with Microsoft (MSFT)  would go through. Since April 22nd the %MCOL has risen from 0.86% to 1.1% on May 1st, but these figures are not particularly significant, and the %MCOL has now dropped down to 1.02% since Friday. Utilisation is at 4%, down from 17% in mid-November, and there are only 1.27 Days to Cover. The average Utilisation for the rest of the S&P 500 is 7.7%, and for the rest of the North America Software & Services Sector it is 12%. Interestingly,

This graph shows Yahoo's Lendable Quantity (red line) v the stock's Quantity on Loan (green line). You will see that the Lendable Quantity took a dramatic decline in early February, from 342m to 240m shares in March, when Beneficial Owners decided to sell their stake. The bid started soon after. Interestingly, around the same time as the Lendable Quantity decreased in Yahoo, there were 180m shares traded, compared to the company average of 45m.

Microsoft's %MCOL is lower than Yahoo's at 0.83%, with Utilisation at just 2%. It seems that short sellers are giving these two stocks a wide berth. 

Guaranty

Guaranty Financial Group (GFG), the Texas-based bank, lost $10 million in the first quarter, CNN Money said on Tuesday. The bank, whose four segments include commercial and retail banking, and insurance and treasury, has set aside $58 million to cover loans it does not expect to be repaid.

11% of Guaranty's Market Cap is on Loan to short investors today, an increase of 550% since early March (please see graph). Utilisation is 40%, so there is still 60% of the available supply left to borrow. For those investors who believe that the price will rise (from 8.5USD today), there are 24 Days to Cover. The average Utilisation for the rest of the US Small Caps is 20%, for the rest of the North America Banks it is 22%. Other stocks in the sector with a high %MCOL include Indymac Bancorp at 38% and Washington Mutual at 31%.

ITV

Dawn Airey left her job at ITV (ITV) yesterday to return to Five as chairman and chief executive, says the FT. The Companies & Markets section of the paper says Airey's move could revive speculation that Five's owner, RTL (RTL), may be preparing a bid for ITV, or at least the 17.9% stake British Sky Broadcasting (BSY) Holds.

In short interest terms, the data shows that the percentage of ITV's Market Cap out on Loan to short sellers has risen from 4% in January to 7% today (the spike here is dividend trading which does not account for short interest). Utilisation is at 16%, so there is still plenty left to borrow and there are 15 Days to Cover. The average Utilisation for the rest of the EMEA Media Sector is 23%, and for the rest of the FTSE 100 it is 7%.  RTL, listed under BE Equity, has just 0.25% of its Market Cap out on Loan, even though it is 31% Utilised, meaning it is very difficult and expensive to borrow this stock.

BSkyB has 6.49% of its Market Cap out on Loan to short investors, with Utilisation at 24%. There are 21 Days to Cover. In the rest of the UK Media Sector, Trinity Mirror, Johnston Press and Yell Group are the most borrowed stocks.