Short Stories

BNP Paribas

The short interest in BNP Paribas (BNP) has been rising steadily over the past six months. The percentage of the company's Market Cap on Loan (%MCOL) has gone from 6% in October, down to 5% in December, and has now risen to 9.24% today. In the last week the %MCOL has risen from 8.3% to the figure today, as the price dropped again from 70EUR to 67EUR in the same time frame. Utilisation is at 22.1%, up from 12% in November and 18% in February. The average Utilisation for the rest of the CAC is 30%, and the rest of the EMEA Banks is 17%. For those wishing to buy back shares in BNP there are 15 Days to Cover.

BNP has kept itself out of the RBS and NRK style headlines, but on Tuesday the FT reported that JP Morgan was being 'particularly cautious' about Credit Agricole (ACA) and BNP Paribas, as the French Banks fell 1% and 1.7% respectively. The newspaper said that investors were concerned that further write downs and slow earnings might force Europe's banks to raise capital by issuing new shares.

Credit Agricole is a somewhat different beast, with a %MCOL of 5.5%, but this has decreased from 6.1% on April 9th when the shorts started to be covered and the price rose from 20EUR to 22EUR. The price has now decreased to 21EUR. Utilisation is at 31.5%, with 14.8 Days to Cover. Alliance and Leicester (AL.) has a %MCOL of 20.14%, Bradford and Bingley (BB.) is at 18.04%, and Société Generale (GLE) is at 13.99%.   

Nokia: Short interest is mobile

Although the percentage of Nokia's (NOK1V) Market Cap that is on loan (%MCOL) is 2.68%, it is rising. Today the world's biggest mobile phone producer reported the biggest decline in four years (Bloomberg). You will see from this chart of the company's short interest in the past two weeks that the %MCOL has increased as the share price has gone down; from 21.6EUR on April 8th, to 20.2EUR today. However, Utilisation is at a mere 6.8%, so it is unlikely that there will be a short squeeze because there is plenty of supply. There are 4 Days to Cover.

The average Utilisation for the rest of the HEX25 is 15%, and for the rest of the EMEA Technology Hardware & Equipment Sector it is 18%. In the DAX, Siemens (SIE) has a %MCOL of 8%, marginally up from 7% in early March (please note large spike is dividend trading). Utilisation is at 14% and there are 8.4 Days to Cover.

In the FTSE 100, Vodafone Group (VOD) has 1% %MCOL, up from 0.6% in late December 2007. The share price has fallen from 190p then to 150p today. Utilisation is at 1.2%, so again a short squeeze is unlikely with so much supply left.

 

Henkel: Is it all going down the pan?

Lavatory maker Henkel (HEN3) has a percentage Market Cap on Loan (%MCOL) of 27% today, up from 17% in early April. Despite a recent upturn, (from 27EUR to 30EUR between mid-March and mid-April), the price has now fallen back to 28EUR and the %MCOL has increased further. Utilisation is at 52%, up from 35% on March 31st. The company, who make other household products, had secured loans from banks to finance the acquisition of the National Starch businesses for the 12 months after the close of the deal earlier this month (CNN Money).

The average Utilisation for the rest of the German Small Caps is 18%, and for the rest of the EMEA Household and Personal Products Sector it is 20%.

Another stock with a high %MCOL in the Small Caps is Biopetrol Industries Ag (B21) at 29%, with Utilisation at 36%, and Volkswagen Ag at 17.84% %MCOL and 31.47% Utilisation.

Shorts covered in IKB and Siemens

According to our data, IKB, which was one of our best-timed shorts of 2007, is no longer the target of short investors. Late last summer at the height of the sub prime crisis, the banking company, who specialise in Real Estate and dabble in Private Equity; had a percentage Market Cap on Loan (%MCOL) of 9%, and it is now a respectable 2%. Utilisation is still high at 70%, down from 95% last summer. The %MCOL may not seem high but with Utilisation being so high, it is, if you compare how hard it is to borrow this stock. For example, the average Utilisation percentage for the rest of the MDAX is 20%, and the rest of the EMEA Banks is 18%. For those investors who wish to buy back shares in IKB there are 2 Days to Cover. CNN money reported yesterday that the shareholders of the company, who specialise in long-term financing, are to sue Deutsche Bank (DBK) over sub prime deals. They claim Deutsche continued to sell risky asset-backed securities to IKB even after it expected a decline in value of the papers.

This chart of Siemens (SIE) shows that short interest has also decreased; from 40% %MCOL in February 2008. Now the figure is a respectable 8%, and the share price has rebounded from 55EUR to 71EUR in the last two weeks (please click to enlarge graph). For those investors wishing to buy back shares there are 7.5 Days to Cover. The average Utilisation for the rest of the DAX is 25%, and the rest of the EMEA Capital Goods sector is 15%. Utilisation is at 12%, down from 55% in February 2008.

The DAX Index, the benchmark for Germany's markets, declined for a fifth day today, led by Deutsche, which has a %MCOL of 8%, up from 5% in in mid-January (please see graph). Air Berlin (AB1)plunged 4.2%, and it has a %MCOL of 15%, with Utilisation at 90%, up from 20% one year ago. Shorts have been covered in Escada (ESC), which tumbled 7.1%, and small cap the makeup giant's %MCOL is 3%, with Utilisation at 33%. The average Utilisation for the rest of the SDAX is 23%. Thyssenkrupp (TKA) has a %MCOL of 5%, down from 30% in January.

This is the graph documenting the %MCOL of Air Berlin. As you can see shorts have recently been covered but there was an inverse correlation last November.

Short interest towers in La Tour Eiffel

There has been a recent increase in the percentage of Société de la Tour Eiffel's (EIFF) Market Cap on Loan (%MCOL) - which has risen from 1% in late March to 10.3% today. The last dividend repayment was on February 21st so it appears that this is genuine short interest.

The French real estate investment company's share price fell from 120EUR last October to 75EUR in January, and then rebounded to 100EUR last week. It has since dropped off to 96EUR today. Like many of its UK counterparts, EIFF could be suffering from the global credit crunch and today's IMF report that the US subprime crisis will spread even further than predicted. Utilisation is 37% so there is still plenty left to borrow. this has increased from 5% on March 26th.  The Utilisation average for the rest of the FR Equity (Others) Market 9%, and the rest of the EMEA Real Estate Sector is 22%. There are 40 Days to Cover.

Persimmon's (PSN) %MCOL is at 19% today, up from 6% last December. The company's share price dropped from 1050p last October to 700today. Utilisation is 48% with 10 Days to Cover. Hammerson's %MCOL is 10%, up from 2% two years ago and 6% last October.

Assa Abloy opens doors for investors

Assa Abloy Ag (SSAB A) is due to pay a dividend on April 29th, but this graph shows that there is genuine short interest in the stock as well. The percentage of the specialist door opening solution company's Market on Loan has risen from 4% to 10% since early November. The company's share price has dropped from 160SEK to 110SEK in the last year. In the past two weeks the price has rebounded from 100SEK and positions have been closed. Utilisation is at 46%, up from 25% since early January. There are 11.55 Days to Cover. The rest of the OMX's Utilisation is 25%, and the rest of the EMEA Capital Goods is 15%. In early March there were 8m shares traded compared to the company average of 3m.

Communication breakdown in Ordina

Ordina (ORDI), the Netherlands-based service provide of information and communication technology, had its "buy" target price reduced on Tuesday (11th) from €17. to €16, says Newsratings.com.

Our alerts tell us that the percentage of the company's Market Cap on Loan (%MCOL) has risen from 1.5% a year ago, to 8.8% today, having just dropped off from 9.2% earlier this week. As you can see from this graph, the company's share price has dropped from €18 in March 2007 to €10 today. At one point in January the share price dropped to 8€. You will also see that as the share price has dropped, the short interest has risen, so for certain investors, a very profitable trade has been made.

Utilisation is relatively low at 33%, which means there is still plenty left to borrow. A year ago the Utilisation was 5%. The average Utilisation for the rest of the AMX Market is 23%, and for the rest of the EMEA Software Services it is 27%. For those investors wishing to buy back shares in Ordina, there are 11.74 Days to Cover. In January there were 1.2m shares traded compared to the company's one year average of 0.4m.

OCE NV (OCE) is the most shorted stock in the AMX Market at 10.73% (%MCOL), after Usg People (USG) at 9.08% and Crucell Nv (CRXL) at 8.84%; followed by Ordina.

Short interest in Swedbank

According to our data, short sellers have increased their positions in Swedbank (SWEDA) over the last four months. The percentage of the Swedish bank's Market Cap on Loan (%MCOL) has increased from 0.9% to 5% since late October 2007. Juxtaposed with a rise in short interest is a fall in share price: from 235SEK on September 3rd, to 170SEK today. Newsratings.com reported on February 28th that analysts at JP Morgan had reduced their estimates on the bank.

In mid-March there were 16m shares traded compared to the company's six month average of 8m

Utilisation is relatively low at 37% and there is still plenty to borrow, but this figure is still an increase from 3% in mid-October. For those wishing to buy back shares there are 4.23 Days to Cover. The average Utilisation for the rest of the SE Equity (OMX) Market is 15%, for the rest of the EMEA Banks sector it is 17%.

Swedbank is the fifth most borrowed stock in the OMX Market, preceded by Eniro Ab Publ at 10.2%, followed by Assa Abloy at 8.82%, then Electrolux at 7.19%, then SKF at 5.83%.

Short interest in Air Berlin

According to our data, short investors have increased their positions in Air Berlin (AB1) over the past year (please click to enlarge graph). In February 2007 the percentage of Air Berlin's Market Cap on Loan (%MCOL) was 2%. Today it stands at 16%. The company's share price has dropped from 20EUR on May 9th 2007 to 11EUR today. The company reported problems 20 months ago integrating LTU, a big chartered airline. According to the FT, there are also plans next year to pay Thomas Cook, the UK travel group, in new shares and cash for Condor, another charter carrier.

Utilisation is 82%, so there is only 18% of the float left for short investors to borrow. For those wishing to buy back shares there are 26.71 Days to Cover (also known in the U.S. as "short interest ratio"). The average Utilisation for the rest of the EMEA Transportation sector is 18%, for the rest of the SDAX it is 20%.

Stock lending in the FTSE 250 outstrips the FTSE 100

Stock borrowing in the FTSE 250 continues to outstrip the FTSE 100, a trend which began in July 2007 and shows no signs of abating (click on the attached chart for details.)  In July 2007, 4.2% of the Market Cap (%MCOL) of the FTSE 100 and FTSE 250 was on loan but since then, lending in the FTSE 250 has risen to 6.6% while lending in the FTSE 100 has fallen slightly and currently stands at 4.06%

These figures would suggest that there is very little sign of midcaps coming back into favour any time soon.  Lending in the FTSE 100 has picked up in 2008, but not as fast as the FTSE 250. 

In the US, mid and smallcaps (as represented by the Russell 2000) still show considerably higher levels of borrowing than the S&P 500 which we first reported back in July 2007.  In the Russell 2000, we saw  Utilisation levels rise from 27% in February 2007 to 38% in August.  But since then, Utilisation levels have fallen slightly to just under 35%.  In the S&P 500, Utilisation levels have oscillated between 6% and 8% during the same period.  However, since Jan 1st 2008 utilisation levels in the S&P 500 have risen from 6.2% to 7.35%.  Utilisation in the Russell 2000 has remained flat during this period.

To summarise, stock borrowers have been increasing their positions in UK mid- and largecaps and US largecaps, but not the Russell 2000 in 2008.  (AH)