After the rebalancing of the MSCI Global Small Cap Index after...

After the rebalancing of the MSCI Global Small Cap Index after close on 31st May we are now back at an aggregated short position of 69m shares.

Some observations:

• Recently, the short sellers have been less active on both the sell and buy sides and the share price has fallen slowly with low trading volumes. Whenever the share price had fallen somewhat, however, some short positions were closed. This trading pattern has reduced the aggregate short position from the original 67m shares around mid-April to 62.5m shares in the last 6 weeks or so.
  

• After close on 31st May most of the necessary volume bought by the index fonds was bought out of the bid and only a smaller part was purchased from short sellers. This is somewhat different compared with the situation on Feb 28 when STX was added to the Index for the first time.

• However, it was enough to bring the aggregated short position back to 69m shares. The short sellers don't have any other short covering possibility than betting on an operational or technical failure with the upcoming drilling campaign or the start of the Walyering gas and condensate production. Hence, further success with our operations put more pressure on the short sellers and makes a strong short squeeze more likely.

• The large trading volume on June 1st was partly explained by the index rebalancing but also by the 20.7m options conversion from Macquarie Bank.