Fairfax Media thumbs down

Now you can read all about it – new information released by the corporate regulator shows Fairfax was the stock most heavily bet on to fall.

The Australian Securities and Investments Commission (ASIC) has, for the first time, published a list of the ‘short’ positions on the Australian share market.

A short position is where traders have sold more shares than they actually own.

They generally do this expecting to be able to buy the extra shares to fulfil their contracts at a later time, at a lower price than the current share price at which they sold, thus being able to pocket the difference as profit in a practice known as ‘short selling’.

The activity is only profitable if the share price of the ‘shorted’ company falls between the sale of the shares and the time when the shares have to be delivered to the counter-party.

Therefore, a higher proportion of investors with short positions in a company means a greater percentage of investors in that company are expecting its price to fall from current levels.

ASIC describes the usefulness of the new reporting of short positions as providing, “a snapshot indication of the bearish [negative] sentiment towards a particular stock at any point in time,” it said in a statement.

“It also indicates the amount of overhang in the stock that will need to be covered at some point by short sellers purchasing shares.

“For investors, this information may indicate the risk involved in trading the stock.”

ASIC is collecting the figures off traders after Government regulation made reporting of short positions mandatory from June 1.

It will continue publish the figures daily, but with a four trading day delay from the reporting date, meaning today’s first set of figures are of positions held last Wednesday.

Fairfax the shortest

That bearish sentiment and risk appears particularly high for media company Fairfax.

Last Wednesday, it was the only one of the 483 companies on ASIC’s list to have short positions totalling more than 10 per cent of its ‘total product on issue’ (the number of its shares on the market).

It came in with almost 272 million reported short positions out of 2,352 million shares on issue – that is, short positions are equivalent to 11.53 per cent of total stock in the company.

The next highest was wealth management company Perpetual at 5.01 per cent, and gold miner Newcrest at 4.63 per cent.

A small group of companies ranged between 3 and 4 per cent, including: Avoca, Western Areas, Boral, CSL, Alesco, Crane Group and Harvey Norman.

The company that was supposed to be one of the major victims of shorting during the financial crisis, Macquarie Group, as of last Wednesday had short positions totalling 1.71 per cent of the company’s shares on issue.

In contrast, the majority of companies had short positions totalling less than 1 per cent of shares on issue.

The reports do not identify individual short sellers or their positions


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One Response to “Fairfax Media thumbs down”

  1. Chris Roubis says:

    Karma is kicking Fairfax..
    All the bullshit in their newspapers, magazines, dating websites, porn sites, sex lines and cell phone ringtone scams.

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