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Short selling


doc-gt

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For some time I have been trying to make sense of the ASX daily short sell list, which can be found at the following link: http://www.asx.com.au/data/shortsell.txt

 

At face value, the list seems to indicate the number of shares in a stock which the ASX will permit to be subject to short selling, along with the number and percentage of shares in a stock which are actually subject to short selling on a particular day (the short sell list seems to lag the current trading day by between 1 and 2 days).

 

My concern is that I may be missing something because every time I look at the ASX short sell list, there always seem to be a number of stocks with a high volume of short sell positions in the market, when simple technical analysis factors such as on-balance-volume would otherwise suggest that trading in such stocks is favouring buyers not sellers!

 

Can anyone shed light on this conundrum or perhaps point to something that I might be missing in my understanding of the ASX short sell list?

 

regards

doc-gt

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In reply to: doc-gt on Tuesday 16/05/06 09:17am

you might take this as simplistic but every day someone sells a stock that someone buys. it isn't hard to imagine someone having an opposite view to longs.

 

if you want a complicated answer then it could be due to pairs trading. this could involve selling one stock and buying another and making money on the relative performance of similar stocks eg. Cu miner A moves 80%, Cu miner B moves 5%. may indicate sell A and buy B and hope the gap closes. there are other pairs trades that may relate to seemingly non-related companies but still bear a relationship be it directly proportional or inversely proportional.

 

maybe some food for thought.

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In reply to: wolverine on Tuesday 16/05/06 10:34am

Thanks Wolverine

 

One of the things I am trying to work out is whether the ASX short sell list might be something that I could add to my checklist when deciding whether to take a position in a stock.

 

For instance, someone once suggested to me that it might be prudent to do more due diligence on a stock if it was showing up on the ASX short sell list as overweight with short sellers. That seemed to make sense, but as I said in my previous post, I have frequently noticed that there are some stocks which are overweight with short sellers but which are otherwise generating buy signals through various technical analysis factors.

 

So, what seemed to make sense on the face of it, has become somewhat confusing.

 

regards

doc-gt

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  • 5 months later...

In reply to: rocksteady on Sunday 29/10/06 07:53pm

short selling is selling stock you don't own (ie borrowing stock) to sell in the hope/belief you will be able to buy them back cheaper and profit from the difference at some point in the future.

 

more or less owning stock is having a 'long' position in which you make money from moves that increase the price.

 

being 'short' you make money on a move that decreases the price.

 

a short covering rally is when short sellers are buying stock to balance their books and this sometimes leads to sudden sharp upward rallies as they chase stock at any price.

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  • 2 years later...

Consequences of short selling?

-------------------------------------------------------------------------------------------------------------

 

Jan. 27 (Bloomberg) -- Paulson & Co., the hedge fund run by billionaire John Paulson, made at least 295 million pounds ($420 million) since September by short selling Royal Bank of Scotland Group Plc.

 

Paulson held a short position of 0.87 percent in Edinburgh- based RBS on Sept. 19, according to regulatory filings. The shares traded at 213.5 pence at the time, and PaulsonÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s disclosure indicates he borrowed almost 144 million RBS shares with plans to buy them back at a lower price. He reduced his short position to less than 0.25 percent, or about 98.6 million shares, as of Jan. 23, according to a filing yesterday.

 

RBS closed at 12.1 pence on Jan. 23, down 94 percent since Sept. 19, as the bank said it would take as much as 20 billion pounds of writedowns in 2008 and post the biggest loss in U.K. history. That decline indicates Paulson made 295 million pounds, assuming it had a 0.25 percent short position on Jan. 23. Paulson, the 53-year-old founder of the $36 billion New York-based hedge fund, made more than $3 billion in 2007 by judging that the U.S. housing market and subprime mortgages would collapse.

 

Paulson, who couldnÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t immediately be reached for comment, also profited from shorting Barclays Plc the Financial Times reported earlier.

 

The Financial Services Authority, BritainÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s market regulator, lifted on Jan. 16 a short-selling ban on financial companies including RBS and Barclays. The restrictions were imposed last September after politicians and investors blamed hedge funds for destabilizing markets and interfering with the banksÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ plans to increase capital by selling shares.

 

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¹Ãƒƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“DistastefulÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢

 

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“It does appear to anyone from the outside looking in a bit distasteful,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ said Michael Trippitt, a London-based analyst at Oriel Securities Ltd. who has a ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“reduceÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ rating on RBS. ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“To allow there to be a lift on the ban was plain daft.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ

 

Short sellers borrow shares and sell them with plans to buy them back at a lower price. FSA Chairman Adair Turner told BBC Radio 4 on Jan. 22 that there was no evidence that short selling had led to significant falls in banking shares. The FTSE 350 Banks Index declined 58 percent in the last six months, with RBS, Lloyds Banking Group Plc and Barclays falling the most.

 

To contact the reporter on this story: Jon Menon in London at jmenon1@bloomberg.net

 

Last Updated: January 27, 2009 06:11 EST adType = "OAS"; Category = "03"; HCat = "x20"; Keys = "null"; Width = "3"; Height = "3"; Tile = "3";CallAd(adType, HCat, Width, Height, Tile, Keys, Category);Advertisement: Top hedge fund managers reveal how they profit in good times and bad.

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  • 3 months later...

short selling Banks will again be permitted as from today

 

 

Australia ends short-selling ban on financials

24 MAY 2009 22:40:23

 

MELBOURNE, May 25 (Reuters) - Australia's market regulator

will lift a ban on covered short-selling of financial stocks

effective from the opening of trade on Monday, it said.

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