Further to a recent post I did on a daily short position which...

Further to a recent post I did on a daily short position which would have affected the (KNL) market on 22 Sept, I went back and had a bit of a look at other days to see if there is a pattern. Many thanks Cromwell for pointing me to the archive on asxonline for daily short sales reporting (as opposed to aggregate short positions open).  I’ve put a little summary/conclusion down the bottom for those who don’t want to read the whole post.

This is not something that has been confined to KNL, by the way, with SYR, TON, and even UNX (now MNS) being sold short.

Here is a list of the daily reported short sales. You can click on any day and see what was sold short that day. Apologies to those to whom I might appear to be teaching to suck eggs, but for this non-trader this was a real interesting eye-opener for me, and I didn’t know we could access the shorts info so easily.

https://www.asxonline.com/intradoc-...lectionID=68&SortField=dInDate&SortOrder=Desc

Here are the days in Sept that KNL had short sales undertaken (note there are more in Aug, but I only went from 1 Sept).

  

Note that I’ve also cross-checked with the ASIC daily aggregate short positions per stock (which is an aggregate running total, not actually a list of the daily sales), and a you’ll notice that if you click on the various daily reports, KNL does not have any outstanding positions on any day, even though  there were short sales reported that day (you can check the same for UNX and TON and SYR or any stock). That indicates to me that the shorts were sold in the morning or throughout the day, and closed out that same day.

http://www.asic.gov.au/short-position-reports

I did a quick chart comparison with a couple of other graphite stocks, namely TON and UNX (now MNS) just to get a quick picture “flavour” for a comparison, and one quick look at a 3 month graph would indicate a pretty strong correlation. The reason I chose TON and UNX to compare with KNL is due to these 3 graphite stocks recently attracting the most day trading crowd (I base that assumption on the number of posts I see from all the graphite stocks, although it’s just my fallible eyes that I’m using as an anecdotal judgement).



Summary/Conclusion:

So what does this indicate to me?

-   Firstly, given it’s market cap, it’s a surprise to find KNL has been targeted by a shorter, but in retrospect, it explains some recent movements. KNL and UNX are both relatively small caps, and although TON is bigger, I’m surprised to see a relatively significant amount of short sales in it too. SYR being sold short is to be expected, given it’s behemoth market cap and relatively “full” price when it was flirting with $6, but for all the others to be included is a surprise to me.
-   Along with KNL shorts being closed out on the day, it also appears that UNX and TON have also been, as they also don’t appear to have any aggregate open positions between trading days. The only one who consistently has aggregate open short positions is SYR (of between 4m and 5m shares), which again is to be expected given it’s market cap.
-   The MO for the shorter appears to be to sell the stock, especially on low volume days, and start some of the herd also taking flight. As soon as they have some panic selling, they cover their open short, and return their position to a net zero by close of trade.
-   We aren’t talking a massive amount of shares involved. 237,000 sold short is the most in Sept for KNL. The numbers are much smaller for UNX, and although TON has a bit more on some days, it’s not a massive amount either.  However, it doesn’t take much stock to encourage other sellers to sell.  Apart from the 22/9 & 5/9, when up to 25% of the volume was from the shorter, on all other days the shorter makes up less than 15% of the volume, and mostly less than 10%.
-   We also aren’t talking a massive amount of movement here. As per my table, the largest single day drop in the period was 3c, and most movements were between 1c  and 2c drop. But you add up the past 3 weeks and that’s a 9c drop on those days, which is a significant (and forced) drop.

Why am I posting this?

I don’t like seeing stock in my company sold short, and even though I’m not going to be a seller for a long time, I still don’t like seeing people play games with the share price just to rip some thousands from unknowing traders/investors who are making decisions based on fear of losing their capital. I am assuming this applies equally to the larger holders in TON & UNX as well, who would also not like seeing people play games with their share prices (unless they are unscrupulously trying to add to their positions by gaming the system).  Given the 3 companies have a correlation in trading charts, it’s probably much more likely to assume that the shorting has been co-ordinated or at the least organised by the same mob(s), rather than a whole bunch of random coincidences.

On days when the fundamentals of the company haven’t changed, to see a significant red day is unnerving to some people, but you are only playing into the hands of someone else when you jump ship in a panic. Sure, if the company has a bad announcement, then by all means use that as a reason to sell. But don’t panic just because someone is trying to put in some sell orders to manipulate the market on a quiet day. You are only playing into their hands.  

And look up the short list regularly. It may surprise you to see just how much KNL/TON/MNS (or other stocks) are on there, and how they are affecting the market on those quiet days. The daily short list for each day is updated by the next day.

Any contributions from anyone who knows the shorts game a little better, that would be appreciated.  Also, while I’m not a holder of TON/MNS, I’d be very interested to read a response from anyone who spends the time to go through the reports for either of UNX (MNS) or TON and notices any other patterns.