Ahead of forthcoming results from Volkswagen and Daimler the recent market update from Ford, do short sellers think the Automobile sector is bouncing back?
In the US, Automobiles & Components is the most borrowed sector at present. People ramped up their shorts in Ford (F) in late March and early April successfully predicting price weakness. On the other side of the coin, long only investors who engage in securities lending have been adding to their Ford holdings. General Motors is listed as Motors Liquidation Co (GM) and, though illiquid, shows very informed short selling. Despite the price falling so far there has been little short covering with a “days to cover” of 8.
Volkswagen (VOW) will announce Q2 sales on the 29th July. With Porsche owning so much of VOW it is now thinly traded with very little available to borrow. Of this amount, 55% is borrowed which represents only 1.5% of the shares in issue. This has risen a small amount recently. However, low traded volume means it would take 20 days to cover the quantity on loan. This will be an interesting one to watch when results are known although once bitten (short squeeze in O8) twice shy could be the watchword of investors worldwide.
Daimler (DAI) also update the market shortly. The company bears witness to slightly falling institutional ownership and rising short interest over the past week. The investor sentiment contained in Data Explorers content points to an expectation that results will lead to the shares pulling back after a strong run over the past 6 months.
In Fiat (F) investors seem to be pretty adamant that the future is bright. There has been significant short covering from 8% of total shares to less than 2% and institutional investors are increasing their holdings over the past week.
In Japan, both Suzuki (7269) and Mitsubishi Motors (7211) see decent short covering and a small increase in institutional ownership. Isuzu Motors (7202) has seen a rising share price and this has been due in part to a big increase in institutional ownership from 120m shares owned by funds who lend to 160m. Shorts are also covering.
To try and summarize short interest from this broad gallop across a scattered sample of large car companies is difficult, but the stand out movements in the Japanese names hint at future increased sentiment.