Money managers under the microscope
Stock out on loan, a good indication of shorting, has doubled over the past month to 2 pct of total issuance, according to figures from Dataexplorers.
When the freefloat is only roughly 10 pct, then this is a significant position.
It was only in October that hedge funds shorting VW ords were caught in the mother of all short squeezes, when Porsche said it had effective control of 74.1 pct of VW, leaving less than 6 percent tradeable in the market and hedge funds scrambling to cover their positions.
VW ords quadrupled, VW briefly became the biggest company in the world by market cap, and managers were looking at what was described at the time as the biggest loss in hedge fund history, although in reality some of the losses may have been borne elsewhere.
Short-sellers have taken a lot of flak during the credit crisis, particularly last year when the slump in banks’ share prices eventually prompted the FSA and other regulators to temporarily halt the practice among financial stocks.
However, it is worth remembering that for all the headlines of huge profits made by John Paulson and others, the practice is not a guaranteed winner and can result in painful losses.
AIG plans to float its Asian crown jewel, Volkswagen halts talks with Porsche, Nomura hires for a massive push in U.S. equities, and more. Here are the latest deal-related stories:
And in Europe's morning papers: