Bears forced out of the woods by FSA
The Financial Standards Authority is publishing a daily list of bearish bets by short sellers, which makes fascinating reading for investors.
The Financial Standards Authority is publishing a daily list of bearish bets by short sellers, which makes fascinating reading for investors.
The list follows the introduction of European rules that came into force on November 1st. Under the regulations, all short positions worth more than 0.2% of a company's market capitalisation have to be revealed to the regulator.
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Additionally if a firm has disclosed a position publically and the position subsequently falls below 0.5% it should make this position public (even if the position is below 0.2%). A private notification will also need to be made if the position is above 0.2%.
Among the major shorts, by percentage of market value, are:
Greenlight Capital has a huge bet against the Daily Mail & General Trust, worth 4.43% of the company (about £80m).
Maverick Capital has a bet against Home Retail Group, worth 4.45% of the company. In addition, Newbrook Capital Advisors has bet 1.13% against Home Retail Group and BlackRock has short sold 1.43% of the retailer.
Carpetright is being shorted to the tune of 3.56% by GMT Capital, while Blackrock has bet against the retailer using 2.57% of its own stock.
It has been argued by hedge funds that short selling improves market efficiency but the added volatility this brings to markets has also been a concern to some in the investment community.
Under the rules managers have to disclose a net short position, so big management houses can hide the extent of their short position by netting it off against another fund with a long position.
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