Every week, S3 tracks short sellers’ equity positions in Asia, Africa and South America, revealing the trades that delivered positive results or missed the mark. After tracking $193 billion worth of short positions, the following is a list of this week’s top five best and worst performing shorts.
Top 5 Best Performing Shorts:
• CHKP US: The Israeli cyber security company had a roller coaster week, finishing at an all-time high of $115.72 before plunging 8% to finish out the week at $106.39, earning it a top spot on this week’s best performing shorts. The drop occurred after Check Point released its mixed second quarter results which were able to beat revenue and EPS estimates but also posted a slower rate of subscription growth and a below consensus 3rd quarter outlook. Citigroup maintained its rating at neutral while Piper Jaffray downgraded to neutral from overweight and also lowered its price target.
• RIO AU: Rio Tinto, an international mining company based in Australia, earned short investors $40.7 million this past week as its price dipped 2.6%. Mining stocks led the Australian markets overall decline last week due to a cut in iron-ore prices. Despite the drop in iron ore prices, Rio Tinto still anticipates to pay out some of its highest dividends ever this year, $2.50 per share, as former CEO Sam Walsh persuaded shareholders to buy into a dividend system that ties them directly to earnings, better reflecting the cyclical nature of the industry.
• AGL SJ: Anglo-American, also a global mining company that is based in the UK and South Africa saw its price fall 3.4%. South Africa, a country where Anglo American does much of their mining, recently proposed restrictions on new mining and prospecting rights. Anglo American’s recent production report showed that copper production has fallen while diamond production increased during the first half of the year. The mining company maintained its full-year production outlook in most categories while raising iron ore production.
• 2333 HK: Great Wall Motor Co, a Chinese pick-up truck and SUV manufacturer, fell 3% last week and had the largest one week increase in short interest in the Hong Kong/China region with an increase of $172 million. Great Wall Motor rose to the eighth largest short in the region with $823 million in shorts.
• VALE US: Brazilian metals and mining producer Vale SA, the largest short in Brazil, saw its price decrease 2.5% as it came out with a mixed production report. The company posted record second-quarter output that handily beat analyst estimates. Unfortunately, these quarterly results also substantiated the possibility of an eventual raw material glut which may drive down prices. With metal and ore prices volatile, Vale is focusing on its production from low cost reserves in northern Brazil in an attempt to maintain strong margins.
Bottom 5 Worst Performing Shorts:
• 6502 JP: After being the top short performer last week, Toshiba now tops this week’s list for worst performance after its share price increased by 21.4%, losing short investors $193.2 million. The California Court of Appeals in San Francisco ruled in favor of Toshiba and against Western Digital, granting Toshiba rights to continue protecting its intellectual property and denying joint partner Western Digital employees from accessing certain facilities and data. Toshiba also launched its renewable equipment company Landis+Gyr IPO on the Swiss market.
• 700 HK: The $360 billion Chinese Internet giant, Tencent Holdings, gained 4.2% last week and is up 57.5% YTD. Despite its impressive yearly returns Tencent maintains its position as the third largest short in the Hong Kong/Chinese stock market trailing only Alibaba Group and Ping An Insurance. The company has maintained robust sales and profit growth, with most of their revenue coming from mobile games and social ads in China’s growing mobile advertising platform.
• 1918 HK: Chinese real estate developer Sunac’s stock price rose just over 17% and cost short investors $95.3 million. Sunac Real Estate and R&F Properties agreed to acquire 91% of 13 cultural and tourism projects and 77 hotels from Dalian Wanda Commercial Properties for 63.7 billion yuan. Sunac will be buying the cultural and tourism projects while R&F will be purchasing the hotels.
• 3333 HK: Real estate developer China Evergrande group saw its prices rise 18.4% after news came out that Chinese Estate Holdings had accumulated nearly a 5% stake in Evergrande since April for a total of HK$8.1 billion, making them the company’s second largest shareholder. Investors interpreted this information as a positive outlook for Evergrande going forward, shares have more than doubled from HK$7.2 since April.
• 068270 KS: The Korean biosimilar manufacturer Celltrion rose 5.7% last week as Congress looks to pass FDA legislation that would increase the prices of both generic and biosimilar user-fee payments. Aggregate generic industry payments are expected to increase 65% from $229 million to $494 million while the aggregate biosimilar industry would more than double from $20 million to $45 million. The bill aims to prioritize biosimilar applications in place of older, off-patent generics that are either short on supply or too expensive to maintain.
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Managing Director Predictive Analytics, S3 Partners
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.