Energy

Amid a return to growth in the U.S. and strong corporate earnings, there is reduced appetite from investors to go short. Despite being one of the two most shorted sectors, we see shorts have covered positions most in Telecommunications, but at the individual stock level they have dramatically reversed their bets against online travel retailers.

Stocks covered include: Expedia Inc. (NASDAQ:EXPE), Tripadvisor Inc. (NASDAQ:TRIP), Priceline.com Inc. (NASDAQ:PCLN), Helmerich & Payne Inc. (NYSE:HP), Netflix Inc. (NASDAQ:NFLX).

We look at the companies in North America, Europe and Asia announcing earnings this week that have seen the most interesting short interest flow in the month ahead of results.

This week’s earnings are fuelled by Energy, Metals and Mining companies as well as Autos and online players Zynga and Zip. We use securities lending flow data to identify the names around the world seeing the most short interest ahead of earnings.

Natural gas is much in the news after Obama’s energy speech this week during which he showed support for this cheap and clean fuel, yet recent investor behavior is not one-way traffic in this regard. The medium term trend shows funds to be very positive towards natural gas businesses and negative towards U.S. coal companies but there could be some short term interruptions to this previously successful theme if recent activity (inspired by the warm winter) is anything to go by.

With the specter of global recession looming over the energy markets, investors are busy aligning their positions in order to react to the latest geopolitical and macroeconomic developments. We find that short interest in the Energy sector has risen over the last quarter as prices have tailed off following the gloomy economic growth forecasts. More precisely, short sellers are focused on Oil & Gas Exploration and Production as well as the Equipment and Services sub-sectors, whilst diversified energy companies and refiners receive less interest.

We are a month into the third quarter earnings season and this week is set to be busy with over 1,000 companies announcing results. We have used securities lending flows to screen these companies to highlight those targeted by short sellers and those which have seen interesting movements in their institutional investor base in the U.S. and Europe.

The U.S. earnings season is in full swing and of the companies reporting this week we have used securities lending flow to highlight contradictory investor sentiment towards stocks in the Consumer Discretionary and Energy sectors, typified by rising short interest and increased holdings by institutional investors who lend.

With market volatility showing no signs of abating and continued talk about a flight to quality, are investors seeking a return from the less fashionable companies that pay a healthy dividend rather than investing in stocks trading on racy multiples? We have used Capital IQ to identify the European large caps trading on the most attractive dividend yields and overlayed securities lending data to assess the behavior of institutional investors.