Premier Oil
One of the companies that has seen the most stock lending activity in the last month is Premier Oil. This has been confirmed by two sources. Euroclear figures show stock lending almost doubling to 15.77 per cent of shares out on loan in April, up from 8.31 per cent in March.
Figures from New York-based stock lending analysts, Data Explorers, show the figure rising from less than 8 per to more than 14 per cent of stock on loan despite the price rallying, suggesting that sophisticated investors are betting on the price falling.
Source: Dataexplorers
However, a great deal of the movement will be related to short-term arbitrage opportunities related to Premier Oil’s rights issue, the results of which were announced on 7 May. Under FSA rules short sellers have had to declare their short positions when a company is in a rights issue, which can be seen here: short selling disclosures.
Under normal circumstances, the rise in shorting would be related solely to the rights issue but the level of lending appears to have persisted beyond the usual landmark arbitrage moments in the rights issue process. This could illustrate that some investors still do not believe the current price is sustainable and may be related to the 137 per cent rally by Premier Oil’s shares.
According to Financial Express, 36 funds hold Premier Oil in their top ten holdings, two of these have Premier Oil as their largest investment. L&G UK Smaller Companies fund has 2.86 per cent of its assets invested in the company making this its largest holding.
The Mercantile Investment Trust, which has an £828m market cap, also has Premier Oil as its largest holding with 2.3 per cent of its assets invested in the company. A month previously Premier had been its fifth largest holding.
However, some funds have a larger percentage of their AUM invested in Premier Oil even though the holdings are not their largest.
The SVM All Europe SRI had 3.9 per cent invested in the company.
The Threadneedle UK Mid 250 fund has 3.8 per cent of its AUM invested in Premier Oil.
The Manchester & London IT has 3.7 per cent of its assets invested
And offshore Norwich UK Ethical has 3.4 per cent of its assets invested in Premier Oil.
Aviva Inv Ethical has 3 per cent of its assets invested.
London Stock Exchange
The London Stock Exchange has seen the proportion of its shares on loan rise to 21.68 per cent in April, up from 18.22 per cent in March, according to Euroclear. However, the level of stock lending appears to be much lower according to the Data Explorers chart below which shows stock lending increasing from 2.5 per cent on loan to 3.5 per cent.
Source: Dataexplorers
The company has seen its shares rally more than 100 per cent since a 370p low on 9 March 2009.
Three funds have the London Stock Exchange in their top ten holdings.
Fidelity Special Values PLC has 3.1 per cent of its assets invested in LSE making it the fund’s third largest holding.
Fidelity Special Situations has 2.7 per cent invested in LSE, its ninth largest holding.
HSBC FTSE 250 Index has 0.94 per cent of its assets invested in LSE making it the fund’s 10th largest holding.
Aquarius Platinum
Another company that appears to have been hit by short sellers is Aquarius Platinum. According to data from Euroclear, the company has seen the proportion of its shares out on loan rise to 9.78 per cent in April, up from 6.04 per cent in March.
However, the latest figures from Data Explorers show that the short sellers have been closing their positions. The chart below shows that stock lending levels have dropped significantly at the end of the month. The share price has continued to rise and will have been boosted by short sellers having to buy back shares to cover their short positions.
This chart from Data Explorers charts the stock lending history against the share price:
Aquarius Platinum's shares are 299p, up 239.77 per cent (as of 8 May) on an 88p low reached on 28 November 2008.
Funds holding this stock in their top 10 holdings are SVM UK Opportunites which has 3.2 per cent of its assets invested in Aquarius Platinum making it the fund’s ninth largest holding.
BlackRock UK Absolute Alpha has a very small proportion of its assets invested, 0.3 per cent, but this still makes it the fund’s sixth largest holding.
Travis Perkins
Travis Perkins' stock lending has increased to 24.98 per cent in April, up from 19.2 per cent in March, according to Euroclear. Its shares have rallied 234 per cent since a 223p low in November 2008. The latest regulated news from the company show a number of asset managers increasing their stakes in the company: Credit Suisse, Investec, Aegon,.
According to Financial Express two vehicles hold Travis Perkins in their their top ten holdings.
Temple Bar Investment Trust has a 2.8 per cent holding in Travis Perkins making the company its ninth largest holding.
Investec UK Special Situations has 3.7 per cent of its assets invested in Travis Perkins making the company its eighth largest holding.