FNArena’s Weekly Insights – February 15 2021
In this week’s Weekly Insights:
-Yet Another Short Selling Failure
-February: Early Days, Full Of promise
-A Different Environment For Dividends
By Rudi Filapek-Vandyck, Editor FNArena
Yet Another Short Selling Failure
Short sellers. They present themselves as the shining white knights if not the morally-driven, diligent sleuths who dig into the finer details of how companies operate and communicate with their investors, with the sole aim of uncovering fraud and management misdemeanors, because investors are best served by honesty and transparency, and somebody needs to do the dirty work when others are simply looking to promote the next pump & dump opportunity.
Great theory. And there have been a few excellent examples, both domestic and overseas, of short sellers uncovering the fraud when nobody else did. Blue Sky Alternative Investments springs to mind, as does failed sandalwood grower and marketer, Quintis.
But a much larger number of companies have been targeted mostly via overseas domiciled researchers keen to inform their hedge fund clientele first and then releasing their accusatory research upon the masses. Helped by the fact this is usually a well-prepared, organised gang-attack, the initial result tends to be a sharp fall in the target’s share price.
From Macquarie Group and Fortescue Metals a little further down on memory lane, to Amcor, Credit Corp, Corporate Travel, Rural Funds Group, Seek, TechnologyOne, Tyro Payments, and WiseTech Global in more recent times; all have been subjected to such an attack from foreign short sellers research, but with quite the mixed outcomes.
Among the recent attacks, shares in Tyro Payments have yet to recover, while TechnologyOne stock is well off its low but also still at a distance from the top, and Seek shares are setting new all-time highs, having dipped only briefly back in late October-early November.