I spoke with ASX today and there is nothing illegal in shorting. Feel free to call them or your broker. The article below confirms this is the case also.
Just stay positive and assist in educating the potential shareholders - so they understand that slanderous defamatory attacks of ASX SYR are fake news scam - and the recent increase in shorts is part of the scare campaign.
Short-selling here to stay despite Gerry Harvey’s concerns
In the new movie, The Accountant (spoiler alert), a businessman in Switzerland gets into his car in a deserted parking lot, to be threatened by a man who gets into the passenger seat with a gun.
The gun-toting assailant explains that he is representing shareholders in a company the businessman has shorted, leading to lay-offs of long-term employees and leaving them with no money or healthcare.
The businessman asks which stock he means, as he is shorting many shares. The assailant, who threatens to kill him if he keeps shorting the stock, refuses to tell him — the implication being he should stop shorting everything. The Accountant is a fast-paced movie that could be of interest to Harvey Norman chairman Gerry Harvey and his wife, Harvey Norman chief executive Katie Page, given Harvey’s lashing out at short-sellers of his stock at his annual meeting on Monday.
While Harvey has called for short-selling to be banned, the fact is that short-selling — selling stocks you don’t own because you think they will go down — is a legal part of developed stockmarkets around the world.
Its supporters argue that it provides extra liquidity to the market and allows for more efficiency in price setting. Harvey argued that short-sellers can seek to manipulate the market by spreading false rumours and negative information about a company, pushing down the price for financial gain.
At the heart of Harvey Norman’s issue is the challenge by proxy adviser Ownership Matters to Harvey Norman’s accounting policies. Ownership Matters and others argue that the accounts of Harvey Norman should be consolidated with the accounts of its franchisees to show a truer picture of the financial position of the group.
There are short-sellers of Harvey Norman’s stock — but it is a big jump to argue that the short-sellers may have co-opted proxy advisers like Ownership Matters and others to support a campaign to push down the shares.
Few ordinary people like the idea of short-selling. Harvey argues that investors who don’t like the way he runs the company should “get out quick”.
Australian Shareholders Association director Allan Goldin, who irked Harvey by raising questions about his accounting policies and challenging the independence of two long-time directors up for renomination, said he didn’t like short-selling either.
But in a world where big institutional shareholders and ordinary investors are not always able or willing to buy and sell on each shifting view of the fortunes of a company — and where analysts are not always free to say what they really think about a company — short-selling can more accurately reflect the market sentiment in the price.
Harvey’s critics see him as remarkably thin-skinned, pointing out that there are many more companies with bigger short positions than his.
Only about 3 per cent of Harvey Norman stock is currently shorted. Companies such as Myer, WorleyParsons, Aconex, Metcash, Nine Entertainment, Monadelphous and TFS have had more than 10 per cent of their stock shorted.
Harvey Norman competitor JB Hi-Fi has also had a higher percentage of its stock shorted than Harvey Norman.
Short-selling is here to stay and is not going anywhere soon. At the first annual Sohn Hearts & Minds conference in Australia last Friday, fund managers recommended six stocks to buy and three stocks to short including ASX-listed Corporate Travel Management.
Chicago-based fund manager Leah Zell, who spoke at the conference, has cited Woolworths as a company to short at recent conferences in the US. Unlike Harvey, Woolworths’ management did not seek to attack Zell’s critical comments about their company.
The issue of short-selling was considered by authorities around the world during the global financial crisis when many regulators reacted with temporary bans.
The Australian Securities & Investments Commission banned “naked” short-selling — where the trader does not have a specific arrangement with a shareholder to buy the stock if needed.
Under current law, anyone found deliberately manipulating the market for their financial gain can be prosecuted — although this can be difficult to prove.
Short-selling is much more aggressive in the US, which has some legendary big short players including Jim Chanos, who predicted the demise of Enron. He is now listing battery and electric car company Tesla as a short and criticising the accounting policies of NYSE-listed Chinese e-commerce giant Alibaba.
Wall Street Master of the Universe Bill Ackman has all but admitted he regrets shorting US company Herbalife, as he has become drawn into a long, public war of words over the company.
Short-selling is never popular with company management, but it’s not going away.
In a world where analysts and big investors are often constrained in what they can say and do (and small investors have little capacity to question management decisions), short-sellers deliver their own public verdict. Traders who deliberately manipulate the market with misinformation deserve to be prosecuted, but banning short-selling would remove an important spotlight into the inner workings of public companies.
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