The tech stock is down 48.17 per cent over a month, after a blog post written by an American professor made claims about click-gathering actions of certain software it allegedly acquired when it bought elements of Zanga. There were also allegations of adware use.
Performance of stock vs index over 1 month
Source: FE Analytics
However, the company has strongly rebutted the claims, and the professor, Harvard Business School’s Ben Edelman, has said he was paid to carry out the research by “two American investment firms”, widely believed to be hedge funds that had built up short positions in the stock.
Last month, prior to these events, the stock was one of the most shorted in the UK, as we reported at the time.
The company has reportedly contacted the FCA and claimed it is the victim of market manipulation.
The stock had become popular among UK fund managers during an excellent 2013 which saw it appreciate by 214.56 per cent.
Performance of stock vs index in 2013
Source: FE Analytics
One manager who is sticking by it is Ralph Cox, who runs BlackRock Hedge Selector UK Emerging Companies, a long/short smaller companies investment trust.
Cox and co-manager Richard Plackett have spoken to Blinkx’s management and say they are reassured by what they have heard, although the situation is complex and all the details are not fully clear.
“The reaction has been bad for us and it will take time to rebuild confidence,” he said. “My view is that the internet is more of a grey area.”
“What we have learned is they are not doing anything illegal or wrong and a lot of their historic acquisitions are no longer key parts of the business.”
According to the latest data from Bloomberg, short-sellers still have 8.79 per cent of the stock to sell short, making it the sixth most bet-against company on the market. This is up from 7.53 per cent last month.
Source: Bloomberg
Many of the same names are at the top of the list of those bet against the most this month: Weir Group remains top with WH Smith second and Arian Silver third.
Aggreko knocks Carillion out of the top-10, but both have a very similar proportion of their stock out with short sellers.
Ocado remains just outside the top-10 with 6.7 per cent of its stock out with short-sellers.
The share price has appreciated 425.02 per cent over the past 12 months despite recent results reaffirming that the company doesn’t make a profit.
Performance of stock vs index over 1yr
Source: FE Analytics
The stock surged in 2013 after it announced a tie-up with Morrisons supermarket. However, this week the company reported that it lost £12.5m in 2013, far more than the £0.6m it lost in 2012.
Sales were up 18.6 per cent however, and shares in the company have continued to climb – in fact, they are up 7.54 per cent since results were published on 4 February, compared with a 1.67 per cent rise in the FTSE.
On the same day that results were published, founder Jason Gissing announced he was leaving the company and sold £15m of his shares. He retains a stake worth roughly £79m. Gissing launched the company with two Goldman Sachs colleagues 14 years ago.
Sales by directors are often seen as a bearish sign for a stock, but given that Gissing is departing, it is more difficult to know how to interpret this.
Emerging market manager Ashmore Group is in 20th position on the list, with 5.16 per cent of its stock being sold short.
The stock has been one of the worst hit by the sell-off in emerging markets over the past year.
Results earlier this month show that assets under management fell 4.1 per cent to $75.3bn in the three months to 31 December as clients withdrew money following a poor three years for emerging markets.
Shares are down 15.19 per cent since the announcement was made, although some market participants think it is time to get back in to the stock.
Broker Cannacord Genuity upgraded the shares to a buy on Wednesday, although other brokers are less positive.
It has been a tough month for emerging market investors: Aberdeen Asset Management, a strong performer in recent years, is down 17.07 per cent over the last month compared with the 15.9 per cent loss suffered by Ashmore.
