The Short Report

Guide:

The Short Report draws upon data provided by the Australian Securities & Investment Commission (ASIC) to highlight significant weekly moves in short positions registered on stocks listed on the Australian Securities Exchange (ASX). Short positions in exchange-traded funds (ETF) and non-ordinary shares are not included. Short positions below 5% are not included in the table below but may be noted in the accompanying text if deemed significant.

Please take note of the Important Information provided at the end of this report. Percentage amounts in this report refer to percentage of ordinary shares on issue.

Stock codes highlighted in green have seen their short positions reduce in the week by an amount sufficient to move them into a lower percentage bracket. Stocks highlighted in red have seen their short positions increase in the week by an amount sufficient to move them into a higher percentage bracket. Moves in excess of one percentage point or more are discussed in the Movers & Shakers report below.

Summary:

Week ending April 4, 2018

What a difference a week makes.

In last week’s Report I highlighted one of the dullest weeks on record in terms of short-position changes. Every change in position was an increase, which is a first in the history of this Report, but there were so few and movements were so small that it mattered not.

By contrast, this week’s table looks like something Moses could part.

No fewer than eight companies have rejoined the 5% plus shorted table. Nevertheless, all bar one of the short position increases noted below represent a move of less than one percentage point, meaning it’s all about bracket creep. All the new entries had been hovering in the 4% range.

It was a week which saw the ASX200 continue to slide on trade war fears, breaching its 200-day moving average before finding a bottom late in the week.

Three stocks climbed into the 10% plus club last week. For APN Outdoor ((APO)) this represented a return, rejoining outdoor advertising peer HT&E ((HT1). It was also a return for Orocobre ((ORE)), rejoining lithium mining peer Galaxy Resources ((GXY)).

The newcomer to 10% plus shorted is beef exporter Australian Agricultural Company ((AAC)). See below.

The only short position movement exceeding one percentage point last week was that of small cap medical device company Nanosonics ((NAN)). See below.

Weekly short positions as a percentage of market cap:

10%+

SYR    21.4
JBH     17.0
DMP   16.6
GXY   14.8
HSO    14.2
VOC   12.2
IGO     11.9
NAN   11.6
MYR   11.4
RFG    11.2
MYX   11.1
HT1     11.0
APO    10.5
AAC   10.2
ORE    10.2

In: APO, AAC, ORE                                    

9.0-9.9

NWS, FLT

Out: ORE, APO, AAC                                                                                              

8.0-8.9%

AAD, HVN, PLS, BWX, MTS

In: MTS

7.0-7.9%

TGR, APT, GMA, BAP, IVC, BGA, GXL

In: BAP, IVC, BGA, GXL                Out: MTS

6.0-6.9%

ING, TPM, IPH, GEM, WEB, IFL, CSR, QUB, KAR, BEN, MLX, SEK

In: IPH            , GEM, WEB,             IFL, CSR, KAR, MLX, SEK

Out: BAP, GXL, IVC, BGA, SUL               

5.0-5.9%

SUL, AHG, JHC, CCP, BIN, IMF, MOC, NSR, RSG, WSA, SHV, MQA, BKL, RIO, PRY

In: SUL, CCP, BIN, IMF, NSR, WSA, SHV, MQA, BKL, PRY               

Out: KAR, CSR, IFL, SEK, WEB, IPH, MLX, GEM

                     
Movers & Shakers

Disinfection specialist Nanosonics has been undergoing a steady rise in short positions over past weeks, in line with a gradual decline in stock price. This week stockbroker Morgans noted new guidelines in Germany should boost the uptake of Nanosonics’ Trophon product in that market, while at the same time slashing near term earnings forecasts to reflect a shift to a more direct sales channel.

Morgans retains an Add recommendation nonetheless. Stockbroker Wilsons continues to include the stock as one of its Conviction Calls.

Last week Australian Agricultural Company issued a profit-warning, ahead of the release of its FY18 (end-March) result. The stock fell -9% in response.

AACo warned FY18 operating earnings will be up to -73% lower than 2017, statutory earnings would represent a loss, and cash flow would be negative compared to positive a year earlier. Impairments will be taken on an onerous contract provision and on the company’s Livingstone beef processing facility.

AACo’s half-year result also disappointed last year, suggesting that the company’s transition from a livestock company to a branded beef business has not reaped the rewards assumed. The full year result only serves to confirm this fear, and AACo is now looking to back-pedal from the questionable strategy.

 ASX20 Short Positions (%)

To see the full Short Report, please go to this link