Short Covering Sends Myer Surging

By Glenn Dyer | More Articles by Glenn Dyer

Myer shares leapt 37% yesterday as investors digested the losses for the 2017-18 financial year.

Did investors look at the comments from the new CEO on his new approach (which is really old) and conclude their gloom of the past year or so about the department store chain was wrong – for now anyway?

New CEO John King is going to try and told idea of selling less at discounted prices (sales) to shift stock and selling more at full prices.

The only problem with that is that it had been tried before and failed.

Well, maybe, or maybe not – much of the rise seems to have come from short sellers being caught, well short, by an early rise in Myer shares which were up 10% or around 4 cents in the first half hour of trading yesterday.

After falling 4.6% to 41¢ on Wednesday after the net loss of $486 million was reported, Myer’s shares rose 37% to close at 57¢ – the highest they have traded since February.

The shares traded on heavy volumes with almost 6% of shares – abut 49 million – changing hands.

Myer is the eighth most shorted stock on the ASX with about 11% of shares held in a short position, according to Shortman.com.au.

It would seem many shorts were forced to cover when some positive reactions from analysts emerged overnight in the wake of the results release and briefings.

Helping boost confidence was the news on Wednesday that Myer had renegotiated its debt and extended it to two and a half years, taking the pressure of the company.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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