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As a general dogsbody, I wonder if you could just explain the shorted position table published in the Saturday report a little more.
For example, what is the weekly percentage – percentage of what?
And is a +ve or -ve weekly change number a sign of the shorted stocks with the potential price to come down?
Not being overly knowledgeable on the art of shorting stocks, these few clarifications will help clear up information delivered within the table in the Saturday report
A: The short sales report shows the most shorted stocks by the percentage of shares shorted. That is, if a company has 100m ordinary shares on issue and 15m are shorted, its percentage of shares sold short is 15%. We show the top 20 companies on this measure.
What does it mean? If a company has a large percentage of shares shorted, that means that there are professionals saying that the company will under-perform. They are not always right – and not always saying that the price will go down. Sometimes, professionals short one company against a long position in another company. For example, if they think Westpac will outperform NAB, they might be long Westpac, short NAB shares. That way, the take out any “banking industry risk”.
Most companies usually have some short positions (due to natural hedging in the options market and other factors), but it is the bigger ‘relative’ positions that are interesting – and that’s why we rank them by percentage of shares shorted.
Positive and negative movements? This shows movement over the last week. A -ve change means the short position increased, a +ve change means the short position decreased and the percentage of shares sold short decreased. Movements indicate new net short positions being opened (-ve), or net short positions being closed (+ve). Direction is important because it indicates what the professionals are doing. It is also worth pointing out that some of these short positions can last for years…………..so when position are changing becomes useful information.
