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Wednesday, May 28, 2014

The Interesting fact behind the shorting of Super Group

In order to short a share in Singapore, one has to borrow from SGX CDP or their brokers first, before selling the shares. This is called 'covered' short. He will then have to pay a borrowing fee ranging from a low of about 1% pa to as high as 10% pa on the average daily market value of the share. This borrowing fee is split between the owner of the share and the broker or CDP.(Due to the lack of transparency on the percentage split of the fees, i really do think i have been short changed by my broker but im digressing. Will complain another day.)

Another way is to do a 'naked' short. What this means is you do not borrow a share, but just sell the shares in the open market. This is stupid as you MUST buy the shares back within the same day or be slapped with a fine of at least $1000 or 5% of the trade, whichever is higher. 

Super Group went ex-bonus on 26 may 2014. Let us look at the volume of shares shorted (vertical) VS dates (horizontal). Do note that volumes on 26 May and 27 May has been adjusted to take into account the XB. As can be seen from the trend, volume of shares shorted is on the decline. 
So how much more can these "Shortists" continue to sell the shares? I do not know for certain.

However, if i  were to take into account the available public information, it seems they have not much fire power left. Looking at the available lending pool of CDP for Super, there is 0 Super Group shares left to be borrowed.

Looking at the available lending pool of shares from POEMs below, there are only 9000 shares available for borrowing. There are many other brokers out there who can lend shares and i do not know their available pool. So if CDP and POEMS is any indication, the fervent short selling could come to an end and the buy back process to return back the borrowed shares could be underway now. This is probably reflected by the increase in share price (albeit small) and a noticeable large buy queue at the bid price.
It's interesting to see how the share price play out the next few days. Buyers beware as there are large sharks around. Your loss is their gain!


6 comments:

  1. Thank you for this nice post.
    I like this kind of post ,
    Because it gives me clear and beautiful ideas about this topic.
    I hope your prosperity.

    ReplyDelete
  2. it depends how u look at it. when CDP has no more shares to lend you may see it as shortist have no firepower, but i see it as the shortists have sold as much as they can through this avenue, and have no intention of covering their short positions, hence there is no more shares left to short.

    If shortist think that the trend is going to change, wont they cover their position and return shares to CDP?

    Instead, people short until CDP got no more share left and no one want to buy back and cover cos they expect futher slide

    An examples i can give:

    Bear market of 2008, Some market makers in Singapore do not allow people to short shares because they "ran out of scrips". The short interest was way more than long interest hence people short until they ran out of scrips for people to short, people short until cannot short anymore and had no intention to cover thats why got no more share left to lend people to short

    ReplyDelete
  3. Yes you are right, it depends on how one sees it.Glass half full or half empty.
    I am also wondering how updated the information is.

    There is still shorting going on definitely which may come from borrowing from other brokers.

    ReplyDelete
  4. With a PE of 16 and a NAV of 40 cents per share, now trading at a price of $1.48 it is more than fully valued to me. You may have mentioned that it is cheaper than its competitors, but there are many better value buys for me out there. Id rather not long it. Good luck.

    ReplyDelete
  5. SUPER group, SUPER company SUPER horrible price way overvalued

    going back to where it belongs, around 60 cents which was its 2012 january price.

    The run up to 2.40 (based on post share split) was just silly.

    ReplyDelete
  6. Yes you are correct, it relies on upon how one sees it.glass half full or half vacant.

    I am additionally thinking about how redesigned the data is.

    There is as of now shorting going on doubtlessly which may originate from obtaining from different dealers.

    Iskandar Singapore Properties

    ReplyDelete

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