Short sellers borrow shares from the prime brokerage arms of investment banks like UBS to sell on market and then try to buy them back later at a cheaper price to return to the lender while pocketing a profit.
Short selling can be a high-stakes game though as short sellers tend to hunt in packs which means trades become crowded and likely to unwind violently if a heavily short sold company beats the market’s expectations.
Below I have five companies heavily shorted that may rocket or plunge in price depending on their next financial updates. So let’s take a look at what might be behind the short interest. All stats correct as at March 9 according to ASIC’s daily report.
Myer Holdings Ltd(ASX: MYR) has 15.52% of its shares shorted and will report its half-year results tomorrow which will include the crucial Christmas trading period. The stock is being shorted on expectations of weak sales as the department store falls out of fashion, although if it produces more same-store sales growth it could rocket above today’s $1.14 share price.
MYR Price at posting:
$1.14 Sentiment: Hold Disclosure: Held
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