Summary:
Week ending July 16, 2020.
Last week saw the ASX200 bounce around but go nowhere until some positive vaccine news sparked a rally at week’s end.
Once again very little action at the top of the table, and really only a bit of shuffling around at the low end.
Only one stock saw its short-position change by one percentage point or more last week, being Zip Co ((Z1P)), the shorts in which rose to 7.1% from 5.3%. See below.
Otherwise, about the only stock worth mentioning is Clinuvel Pharmaceuticals ((CUV)), which is a biotech specialising in skin disorders. It has been quietly creeping up the table, reaching 8.0% last week.
While it’s difficult to make a connection between skin disorders and covid, the stock has been extremely volatile these past months, appearing almost daily on the top five ASX200 winners or losers boards. While biotechs are by their nature risky investments, it still seems remarkable.
Clinuvel is not covered by any FNArena database brokers.
Weekly short positions as a percentage of market cap:
10%+
MYR 12.1
WEB 10.0
No changes
9.0-9.9
ING
No changes
8.0-8.9%
NEA, CUV
In: CUV Out: BOQ, GXY
7.0-7.9%
BOQ, GXY, FXL, ORE, Z1P
In: BOQ, GXY, FXL, Z1P Out: CUV
6.0-6.9%
MTS, FNP, JBH, PGH, PPT, SGM, SUL, MSB
Out: FXL, SXL, FLT, PLS
5.0-5.9%
FLT, PLS, SEK, CLH, ALG, IVC, SXL, BIN, LYC, BUB, IFL, AMA
In: FLT, PLS, SXL Out: Z1P, CTD, LOV
Movers & Shakers
From its covid-crash bottom to Monday last week, Zip Co rallied 550%. The BNPL player has largely chased up more recognised peer Afterpay ((APY)), which rose 760%. In a covid world, short-term finance for millennials is king.
Zip Co did provide a positive June quarter update at the end of last week, and two of the three FNArena database brokers covering the stock remain on Zip for the ride (Buy), while UBS has bottled on valuation and downgraded to Sell. Targets range from $6.45 (Ord Minnett) to $5.70 (UBS).
The comparison with Afterpay is interesting. Six FNArena brokers cover the latter stock, with two on Buy, three on Hold and one on Sell, which is of course UBS. Morgan Stanley has a target of $101 for Afterpay (last trade $71.97), while UBS has $27.00. UBS believes millennials with access to buy-now credit are going to blow themselves out of the water.
So far they haven’t, but the shorters are circling, with Zip Co now on 7.1% from 5.3%.
By contrast, Afterpay did feature heavily on the 5%-plus shorted table earlier in the run, which preceded that of Zip Co, but it’s now only 1.0% shorted, leaving a few smouldering corpses. Which way will Zip Co go?
ASX20 Short Positions (%)
| CODE | LAST WEEK | WEEK BEFORE | CODE | LAST WEEK | WEEK BEFORE |
|---|---|---|---|---|---|
| ALL | 4.2 | 4.4 | NCM | 0.6 | 0.8 |
| ANZ | 0.7 | 0.7 | RIO | 2.1 | 2.1 |
| BHP | 4.1 | 4.1 | SCG | 0.8 | 0.8 |
| BXB | 0.3 | 0.2 | SUN | 0.6 | 0.5 |
| CBA | 0.5 | 0.5 | TCL | 0.6 | 0.6 |
| CSL | 0.3 | 0.2 | TLS | 0.5 | 0.4 |
| GMG | 0.4 | 0.4 | WBC | 0.9 | 0.8 |
| IAG | 0.7 | 0.7 | WES | 0.4 | 0.5 |
| MQG | 0.3 | 0.2 | WOW | 0.2 | 0.3 |
| NAB | 0.8 | 0.8 | WPL | 1.3 | 1.3 |
To see the full Short Report, please go to this link
