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. Percentages 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.
Month ending January 17, 2019
Welcome to the first Short Report for 2019. Even Short Reports need a break, and this one is now back well rested and ready for excitement in 2019.
Given the break, this first Report covers changes in short positions over the period of a month rather than the usual week. Next week’s Report will revert to the usual week to week analysis.
When last we left the ASX200, it was heading for a bottom of 5493 on Christmas Eve, before rebounding to 5850 last Thursday, being the date of the latest short position data provided by ASIC.
We shall first note that in the interim, S&P/ASX has deigned to recalibrate the Top 20 index of largest cap stocks, short positions for which appear in the table below. Out goes Origin Energy ((ORG)), after only a brief stay, and out goes QBE Insurance ((QBE)). In come Coles ((COL)) and South32 ((S32)).
One reason the Australian stock market is not enormously popular with foreign investors, and the reason why Australian passive investors should be wary of simple index investment, is the extreme overweighting of the Top 20 stocks in the ASX200 by market cap, and the lack of diversification thus offered.
We note that last year Wesfarmers split into Coles and The Rest, yet individually both companies are still bigger than Origin and QBE. The other newcomer is South32, itself a spin-off of then BHP Billiton not that long ago. The Top 20 is thus even more concentrated than it was before.
The previous Top 20 contained no less than eight financial sector stocks (you wouldn’t want to have a Royal Commission if you were a passive investor). QBE’s departure leaves that at seven, while the swap of Origin and South32 leaves resource sector representation at four. There are now four retailers, if we count Shopping Centres ((SCP)), a REIT that lives and dies on Westfield mall traffic, as retail. Diversification beyond these three sectors is left to just five stocks.
Never mind, Canada is much the same.
Of the Top 20, Amcor ((AMC)) is by far the most heavily shorted at 7.6% and at the end of 2018 the only Top 20 stock more than 5% shorted. But say hello to BHP Group ((BHP)), which has since snuck in at 5.5%.
Amcor shorts likely represent a pairs trade with takeover target Bemis in the US. BHP shorts may relate to a play around the special dividend, now paid, so we’ll we see where they stand next week.
Outside of the Top 20, there’s been a little bit of a shuffling of the deck chairs among those stocks 10% or more shorted, but nothing of significance. Nufarm’s ((NUF)) entry to the club is a dry argument.
In the 5-9% brackets, only one stock has seen a change in the period of one percentage point or more. Nanosonic ((NAN)) shorts have fallen to 6.0% from 8.3% before Christmas. There is a lot of shuffling around in the lower brackets but nothing of particular note.
At least for the time being, we say goodbye from the 5%-plus table to Carsales ((CAR)), Blue Sky Investments ((BLA)), CleanTeq ((CLQ)), Sigma Healthcare ((SIG)), Perpetual ((PPT)) and Corporate Travel Management ((CTD)).
Movers & Shakers will return next week.
Weekly short positions as a percentage of market cap:
DMP, IFL, HVN, BAL, SDA, SUL
In: MSB Out: NWS, NAN
AMC, NWS, MND, BKL, CGF
In: NWS, BKL, CGF Out: MSB, KDR, FLT
CCP, A2M, FLT, AMP, HT1, BGA, GMA, BEN, BOQ, APT, KDR, NAN
In: NAN, KDR, FLT, BEN Out: BKL, CGF, RWC, AHG, AAC, MLX, GEM
SEK, ARB, BHP, A2B, MLX, RSG, LYC, PTM, AAC, DHG, KAR, CLH, RWC, BIN, VOC
In: MLX, AAC, RWC, BHP Out: BEN, CAR, BLA, CLQ, SIG, PPT, CTD
Movers & Shakers
ASX20 Short Positions (%)
To see the full Short Report, please go to this link.