Eurostar’s $1.1 billion Spend Plan and other Rail Companies

As Eurostar announces plans to spend $1.1 billion to expand its fleet and routes to fend off competition from Deutsche Bahn, strikes in France on Tuesday have thrown the country’s transportation system into chaos. We take a look at those parties involved in Eurostar’s plans and investor sentiment in companies involved in European rail transport: Siemens AG (SIE), Alstom SA (ASO), Eurotunnel, Groupe Eurotunnel SA (GET), National Express (NEX) and Stagecoach (SGC).

Eurostar has ordered its new fleet from Siemens AG (SIE), leaving current supplier Alstom SA (ASO) seeking legal action against this decision. Siemens, best known for its communications business holds a diversified business portfolio, with transportation and automotive as one of many segments. Recent securities lending data in the stock depicts investor sentiment as mildly bearish. Institutional ownership has decreased from 198 million to 186 million shares since early August. In this time there has also been an uptick in short interest from 1.6% to 2.2% of shares outstanding on loan.

Alstom SA, a key supplier of locomotives and high speed trains, seems to be maintaining investor confidence despite share prices reaching new annual lows. Institutional ownership, from the funds who lend, is at an all time high of 54 million, whilst short interest is at a low of 2.5%, with less than 10% of the lendable supply out on loan.

The operator of the Eurotunnel, Groupe Eurotunnel SA (GET) may soon see Deutsche Bahn running in the Eurotunnel. Funds who lend have been gradually adding to their positions, increasing institutional ownership from 80 million to 90 million shares since June. Short interest is at a low of 1.2% shares outstanding on loan.
In other European transportation, National Express (NEX) has seen gradual short covering since July, lowering short interest to 4% after a jump from 2% to 5% in June. The proportion of lendable supply currently on loan is down from 14% recorded in July to 8%.

UK company Stagecoach (SGC), which also has operations in USA and Canada, has seen an increase in short interest from 4.5% to 6% since August. More significantly, the reduction in institutional ownership by 10 million to 140 million in this period coupled with increasing stock on loan has led to utilization increasing from 16% to 24% since August.