Forthcoming European Earnings – The Short Perspective

This week sees the start of the European reporting season in earnest, with updates expected from Real Estate, Construction, Automotive and Media stocks. We look at investor sentiment in Daily Mail and General Trust PLC (LON:DMGT), Bellway PLC (LON:BWY), St. Modwen Properties PLC (LON:SMP), Peugeot SA (EPA:UG), Renault SA (A:RNO) and CSR PLC (LON:CSR).

Daily Mail and General Trust will report first quarter earnings on Wednesday. The owner of the Daily Mail newspaper has announced plans to move its printing operation out of London to a new GBP 50 million development. Short interest currently stands at 9.5% of total shares outstanding on loan, which represents almost 35% of the shares that are available to be borrowed. Despite the company being listed as the 11th most shorted stock in the FTSE All Share Index, there has been a recent surge of support in the stock from long-only institutional funds who make their shares available to be lent. This is our proxy for institutional investors and they have increased their stake by 10 million shares to 71 million shares over the past month or 20% of total shares in issue.

UK Construction Services firm Bellway is due to release its trading statement today. Despite a return to modest growth in UK construction orders reported for January, Bellway’s share price has been steadily falling since the start of the year. However, investors have shown positive sentiment towards this stock, with short interest gradually declining to 2.1% of total shares outstanding on loan, having peaked at 3.5% in June. Holdings of long-only funds who lend have increased by 50% since the beginning of January to 26% of total shares.

St. Modwen Properties will report full year results later this week. Following a year of flat-lining share price and institutional ownership, investor sentiment seems to be improving. Institutional ownership has increased slightly over the past month to 17% of total shares. Short interest has also fallen from 1.7% to 1% of total shares outstanding since the start of the year.

French automobile maker Peugeot SA will report fourth quarter and full year earnings. Positive investor sentiment in securities lending has been mirrored by the rising share price. Short interest has reached an annual low of 4.5% whilst institutional ownership has almost doubled to 19% of total shares.

Renault SA will report fourth quarter earnings on Thursday. Short interest has fallen from 5% to 2% of total shares outstanding on loan since September, as the share price continues to reach new annual highs.

Finally, FTSE250 Semiconductor firm CSR PLC, which has recently signed an agreement with ARM Holdings to license chips to be used in navigation equipment, is due to report earnings on Wednesday. Shorts have covered positions over the past quarter, with short interest declining from an annual high of 7.2% to 2% of total shares outstanding on loan.