Shorts reviewed
We looked at the largest short positions on stocks currently covered by AlphaValue and wondered to what extent we would agree. Here is the list as captured from European exchanges, as of 18-02-2019.
We matched this list with our own fundamental views and the current share price momentum on these companies. The obvious point is that those stocks on average are not top in class with a low “fundamental strength” (which defines the resilience of a business model) and weaker average balance sheets with an average BB.
The performance chart below is unweighted to reflect the differences in market caps.
Most shorted stocks (in pink) actually outperformed ytd
In a more granular way we see a 15% or more upside potential on the following names which may not be ripe for a fall. To be fair Weredhave and Oriflame are due for downgrades.
Shorts with a strong AlphaValue upside potential
There are also stocks for which the market goes against the shorts. We can identify this through AlphaValue proprietary momentum metrics dubbed “Momentum”.
Shorts that can wait
The last view is to highlight those stocks for which short sellers seem to be right and the AlphaValue analysts may be somewhat optimistic
Shorts that seems right
On a more qualitative view we are of the view that:
| COUNTRY | COMPANY | SHORT POS % | SELLERS |
| NE | FUGRO NV-CVA | 15,8% | 12 |
| FR | CASINO GUICHARD PERRACHON | 12,5% | 14 |
| GB | MARKS & SPENCER GROUP PLC | 10,9% | 10 |
| FR | VALLOUREC SA | 10,6% | 11 |
| GB | ANGLO AMERICAN PLC | 10,1% | 9 |
| FR | INGENICO GROUP | 9,2% | 6 |
| GB | PEARSON PLC | 8,5% | 9 |
| GE | HEIDELBERGER DRUCKMASCHINEN | 8,3% | 6 |
| NE | WERELDHAVE NV | 8,0% | 10 |
| FI | OUTOKUMPU OYJ | 7,7% | 7 |
| FR | NEXANS SA | 7,1% | 6 |
| GB | ASOS PLC | 7,0% | 6 |
| LX | EUROFINS SCIENTIFIC | 6,7% | 8 |
| GB | INTU PROPERTIES PLC | 6,3% | 8 |
| NE | BOSKALIS WESTMINSTER | 6,2% | 8 |
| NE | KONINKLIJKE BAM GROEP NV | 5,9% | 6 |
| FR | SOCIETE BIC SA | 5,8% | 7 |
| NO | PETROLEUM GEO-SERVICES | 5,8% | 6 |
| GE | K+S AG-REG | 5,5% | 7 |
| FR | VALEO SA | 5,1% | 2 |
| FR | ILIAD SA | 4,9% | 4 |
| GB | WM MORRISON SUPERMARKETS | 4,8% | 5 |
| GE | ELRINGKLINGER AG | 4,7% | 4 |
| GB | AGGREKO PLC | 4,7% | 6 |
| GE | CECONOMY AG | 4,5% | 5 |
| Shorts Feb 18th | AlphaValue Universe | |
| Upside | 15.4 | 13.1 |
| Momentum | - | + |
| Fundamental Strength | 2.4 | 6.1 |
| Yield | 3.5% | 3.9% |
| Credit Risk | BB | BBB |
| Governance Score | 70 | 65.6 |
In a more granular way we see a 15% or more upside potential on the following names which may not be ripe for a fall. To be fair Weredhave and Oriflame are due for downgrades.
Shorts with a strong AlphaValue upside potential
| Company | Country | Upside | Momentum | Fundamental Strength (max 10) | Dividend Yield 2019 | Credit Risk |
| Vallourec | France | 77,9% | Negative | 0 | 0,00% | CCC |
| Iliad | France | 51,6% | Negative | 3 | 0,96% | A |
| Fugro | Netherlands | 36,3% | Good | 0 | 0,00% | B |
| Boskalis | Netherlands | 36,2% | Good | 1 | 4,35% | A |
| Eurofins Scientific | France | 32,3% | Unfavorable | 8 | 1,01% | BBB |
| k+s | Germany | 25,3% | Good | 2 | 5,42% | BB |
| PGS | Norway | 25,1% | Good | 0 | 0,00% | BB |
| Outokumpu | Finland | 22,0% | Unfavorable | 2 | 5,96% | BB |
| Valeo | France | 16,8% | Good | 4 | 4,00% | BBB |
| Nexans | France | 16,7% | Good | 3 | 2,74% | BB |
| Wereldhave | Netherlands | 15,5% | Negative | 4 | 10,2% | BBB |
| Asos | UK | 15,2% | Unfavorable | 4 | 0,00% | BB |
| Company | Country | Upside | Momentum | Fundamental Strength (max 10) | Dividend Yield 2019 | Credit Risk |
| UK | Anglo American | 9,24% | Strong | 6 | 5,05% | A |
| France | Casino | -3,65% | Strong | 3 | 6,93% | B |
| UK | Intu Properties | 10,7% | Good | 0 | 12,1% | B |
| UK | Wm Morrison | 7,62% | Good | 4 | 2,71% | BBB |
| UK | Marks & Spencer | -20,6% | Good | 0 | 0,00% | B |
| UK | Pearson | -13,5% | Good | 2 | 1,85% | BB |
| Germany | k+s | 25,3% | Good | 2 | 5,42% | BB |
| Company | Country | Upside | Momentum | Fundamental Strength (max 10) | Dividend Yield 2019 | Credit Risk |
| France | Vallourec | 77,9% | Negative | 0 | 0,00% | CCC |
| Netherlands | Wereldhave | 15,5% | Negative | 4 | 10,2% | BBB |
| France | Iliad | 51,6% | Negative | 3 | 0,96% | A |
| Germany | Elringklinger | 5,07% | Negative | 1 | 6,83% | BBB |
- Vallourec indeed has a weak balance sheet but it is also a call option on profile on any business pick up
- Casino’s liquidity problems seem to be addressed by the quick fire sale of its periphery assets
- Oriflame operations indeed are set to suffer again in 2019 (so that the upside potential is downgraded to less than 10%)
- Shorting PGS is becoming risky after a solid Q4 and upgraded outlook.
- Anglo American is under the speculative pressure of Vedanta/Volcan (which is admittedly underfinanced) which adds to so far strong operations.
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