Taking stock
19 September 2017
IHS Markit analyst Simon Colvin explores how short sellers are positioning themselves ahead of companies announcing earnings this week
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North America
The most shorted company announcing earnings is restaurant firm Cracker Barrel which has just under a fifth of its shares out on loan. Cracker Barrel shares disproportionately benefited from the post-election rally, but short sellers stayed the course, and demand to borrow the company’s shares climbed in the
subsequent months.
This willingness to double down is now starting to reward short sellers–Cracker Barrel shares started to give back much of their recent gains after some disappointing trading updates.
Short sellers will also be keeping a close eye on United Natural Foods, which also reports on Wednesday. Demand to short the company’s shares surged in the past few months as short sellers ponder the fallout of Amazon buying Whole Foods.
This strategy was largely vindicated in the past few weeks as United Natural shares fell heavily on news that Amazon was aggressively cutting prices in its newly acquired division.
Europe
The high conviction short among firms in Europe is Morrison Supermarkets. Morrison’s current shorting activity represents a large improvement in investor sentiment–demand to borrow its shares was nearly twice that level 12 months ago.
Falling short interest can be attributed to Morrison’s string of better than expected earnings, which have propelled its shares to the highest level in more than three years.
Fellow UK firms Next and J D Wetherspoon make up two of the three other European shares with more than 5 percent of their shares out on loan ahead of earnings this week.
Asia
Graphite miner Syrah sees the most demand to borrow. Short sellers first started to target the firm after a delay in its Balama project sent shares crashing down. Syrah shares rallied in the last few weeks after it announced some progress on the Mozambique-based project, however, short sellers still remain sceptical and demand to borrow its shares increased to a new all-time high.
The most shorted company announcing earnings is restaurant firm Cracker Barrel which has just under a fifth of its shares out on loan. Cracker Barrel shares disproportionately benefited from the post-election rally, but short sellers stayed the course, and demand to borrow the company’s shares climbed in the
subsequent months.
This willingness to double down is now starting to reward short sellers–Cracker Barrel shares started to give back much of their recent gains after some disappointing trading updates.
Short sellers will also be keeping a close eye on United Natural Foods, which also reports on Wednesday. Demand to short the company’s shares surged in the past few months as short sellers ponder the fallout of Amazon buying Whole Foods.
This strategy was largely vindicated in the past few weeks as United Natural shares fell heavily on news that Amazon was aggressively cutting prices in its newly acquired division.
Europe
The high conviction short among firms in Europe is Morrison Supermarkets. Morrison’s current shorting activity represents a large improvement in investor sentiment–demand to borrow its shares was nearly twice that level 12 months ago.
Falling short interest can be attributed to Morrison’s string of better than expected earnings, which have propelled its shares to the highest level in more than three years.
Fellow UK firms Next and J D Wetherspoon make up two of the three other European shares with more than 5 percent of their shares out on loan ahead of earnings this week.
Asia
Graphite miner Syrah sees the most demand to borrow. Short sellers first started to target the firm after a delay in its Balama project sent shares crashing down. Syrah shares rallied in the last few weeks after it announced some progress on the Mozambique-based project, however, short sellers still remain sceptical and demand to borrow its shares increased to a new all-time high.
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