Some of you may have noticed that as the stock has rallied short positions in HZN have actually grown. I had expected a share price appreciation to "shake out" the existing shorts and contribute to a short-covering rally. Why then have short interests grown?
I believe the existence of the convertible bonds are the reason for the increasing shorts. A convertible is effectively a normal bond with a call option attached. As such, holders of the CBs are currently holding a call option that is (very) roughly about delta 40. As such, if every bond holder where hedging their deltas we could expect to see short interest as big as 64m shares (ie. 160m x 0.4). Obviously many bond holders won't hedge this exposure or will do so at different times/levels but I think this explains the increasing shorts.
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Last
20.0¢ |
Change
0.005(2.56%) |
Mkt cap ! $324.6M | |||
| Open | High | Low | Value | Volume |
| 19.5¢ | 20.0¢ | 19.0¢ | $153.0K | 776.0K |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 5 | 844102 | 19.5¢ |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| 20.0¢ | 338790 | 10 |
View Market Depth
| Last trade - 16.10pm 09/07/2024 (20 minute delay) ? |
| HZN (ASX) Chart |