This website is designed and maintained by Data Explorers to provide insight into market behaviour through the Securities Lending market. Our objective is to encourage a broader understanding and debate about the impact of the short-selling. We believe that stock lending levels can act as a proxy for short interest but we do not offer investment advice or research. We make observations about trends in the market for the reader to interpret as they see fit. The views expressed are those of the Editor and not Data Explorers.
General Electric (GE) who announced that their net income fell 35% on Friday, have seen the percentage of their company on loan fall from 1.8% of the company to 1.2% over the last two weeks. Utilisation, or the percentage of the available supply, has fallen from 9% to 6% in the same time frame. GE's share price has doubled in value - from $6 to $12 since March 6, and before that this figure decreased from $20 to $6 between October 2008 and March.
There has been an increase in the percentage of Citigroup's (C) shares on loan to short investors over the past eight weeks. This morning, the New York financial services giant reported a Q1 loss available to common-share holders of 18c a share, according to Market Watch. This loss 'reflected the reset in January 2009 of the conversion price of the $12.5 billion convertible preferred-stock issued in a private offering in January 2008,' the bank reported.
Between February 27 and March 17 the percentage of the bank on loan went from 2% to 17%. Shares fell from $4 to $1 between February 6 and March 9. However, since then, the price has rebounded up to $4 again, dropping off slightly over the last week.
Sunpower Corp (SPWRA), the North American solar electric power company, has seen an increase in the amount of their shares on loan to short investors over the last eight weeks. This figure has risen from 15% of the company on loan in January to 25% now.
The company's shares have dropped from $36 to $22 between February 11 and March 11, and back up marginally to $27 now. However, although the increase has not been as dramatic as mid-February, short investors are continuing to increase their positions in this stock, presumably as they believe that the price has further to fall. Utilisation, or the percentage of the available supply on loan, is at 70%. The company announces on Thursday April 16.
The most borrowed company in this sector: North America Capital Goods, is Nci Building Systems with 30.69% of their shares on loan, doubling since March 11 from 15%. Utilisation is at 70%.
Wolverine (WWW), the American casual shoes giant, has seen a large amount of short covering in the last six months. In October 2008, 9% of the company was on loan, compared to just under 2% now. The share price continued to drop between October 2008 and March 2009, from $24 to $13, as investors steadily took profits, but since then the figure has rebounded to $18 and is up 15.5% since last month. This short covering could be an indication that the market is expecting good news when the maker of Hush Puppies, Sebagos and Harley Davidson shoes makes its imminent announcement. This graph shows the short covering in WWW (pale blue line) vs the share price (purple).
Another company which announces shortly is Piper Jaffray (PJC), which has also seen an extremely large amount of short covering - with the amount of its shares on loan decreasing by 500% - from 10% of the company on loan in December to 2% now. Again, this is as the share price decreased primarily from $40 to $20 between Christmas and early March, and then rebounded up to $30 now.
Goldman Sachs (GS) on Tuesday completed a discounted $5bn share placing, pushing shares in the US bank lower in early trading, according to the FT.
Despite a recent increase in the percentage of GS on loan to short investors - a rise from 1.5% on April 6 to 2% now, short interest has remained under 3% for the last three months, and has moreover not surpassed 4% since last autumn. As you can see from this chart which documents the percentage of GS' shares on loan (pale blue line) vs the price (purple), there has been a steady amount of short covering over the last three months, presumably as the market assumed that good news was on the way for the Investment Bank as the price started to rise in late January, from $60 then to $120 now.
There has been a recent rise in the amount of Wells Fargo (WFC) that is on loan, rising from 1% to 3.5% since March 3. The share price has has also slightly doubled in recent times, from $10 in early March to $20 now.
There has been a marginal amount of short covering in JPMorgan Chase, down from 1.4% in late February to 0.9% Easter, and then back up to 1% now. The share price has risen as investors take profits, from $15 to $35 in the last six weeks, after the fall from $40 to $15 between October and early March.
Cogeco (CCA) who announce on Thursday, have seen a recent rise in the amount of the company that is on loan - from 3% to 6.5% over the last four weeks. Utilisation, in comparison, is at 9.5%, a relatively low percentage compared to the amount of the company's shares on loan.
Shaw Communications (SJR) has seen a decline in the percentage of its shares on loan, from 0.2% to 004% since January 2009. The share price has also declined, from $18 to $16 in the same time frame.
All DESLI indices bar one rose since the start of this year, inferring a climb in short interest levels. DESLI indices have generally been trading well below 2008 heights, while the DESLI US 30 index, which is predominantly made up of Pharmaceutical, Oil and Computer companies is now down 19% since hitting the new high on March 23, an indication of how stock market volatility is affecting the short interest market.
DESLI Asia (ex Japan) is the only index to fall since the start of the year, hitting a 52-week low of 53.15 on March 31. The index has almost halved since January 2008. DESLI indices track the change in securities lending as a percentage of shares outstanding on loan, acting as a true proxy for short interest and providing investors with much-needed clarity in an opaque market. Continued market volatility will have an impact on short-selling - only the Data Explorers DESLI indices can report changes in the short market on a daily basis.
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This chart documents the DESLI Global 50 - Year in Review:
Bed Bath & Beyond (BBBY), the giftware, health and beauty care specialists, has seen a decline in the percentage of its shares on loan since March 2: down from 12% of the company then to just under 10% now. This is ahead of the S&P500 listed company's earnings announcement on Tuesday. Utilisation, or the percentage of the available supply of the company out on loan to short investors, has also come down, from 44% on February 2nd to 34% now. On Friday of last week there were 3.7m shares traded compared to the company's three-month average of 1.8m. This short covering could be an indicator that the market is expecting good news from the company. Bloggingstocks.com, however, reported that the market is not expecting any earnings growth and that the decline could be as severe as 33% if the retailer matches expectations; but, the good news is that BBBY actually 'has a decent history in terms of beating Wall Street expectations.' BBBY's colleagues include Wal-Mart (WMT) and Target (TGT).
Below is a chart documenting BBBY's shares on loan (blue line) vs the price (purple):
WMT has also seen a decline in the amount of its shares on loan, despite this figure remaining under 1% over the last three months:
It is the same story for TGT, whose short interest has declined from a higher figure of 6% in late January to 2.4% now:
Immucor (BLUD), a provider of automated instrument-reagent systems to the blood transfusion industry, announce their Q3 reults on Monday with a conference call on Tuesday to discuss the results. According to Schaeffersresearch.com, pessimism appears to be on the rise for this stock. In short selling terms, investors have increased their positions in this company since March 16, when BLUD had 2.2% of its shares on loan, to today's figure of 3.5%, as you can see from this graph. This figure has, however, decreased since January 30, from the 3.7% mark. The company's share price has dropped from $30 to $24 over the last six months.
Despite having low short interest at 1%, Johnson & Johnson (JNJ), listed on the S&P500, have seen an increase in the amount of their shares on loan to short investors, rising from 0.4% in October 2008 and more recently up from 0.7% in late February.
Also announcing Q3 results on Monday are Apogee Enterprises (APOG), who unlike Immucor engage in the design and development of glass products, services and systems. Similarly to Immucor, however, is the pattern in short investments, with the percentage of the company on loan rising from 4% in early February to just under 11% now. In October 2008 10% of the company was on loan, with this figure decreasing to the January 2009 figure, as investors closed out their positions ahead of the rise in share price; from $6 in November 2008 to $12 now.
An equivalent company to APOG would be Ameron International (AMN), who have 4% of their shares on loan, nearly a third of that of APOG, despite the fall in share price, from $65 in November to $45 two weeks ago, but up again to $55 now.