Lift Off
We can banish the primeval fear of being stuck in a lift thanks to the amazing way the Otis Elevator Company’s lifts coped with the Japan earthquake. We will look at investor sentiment in quoted elevator manufactures including United Technologies (NYSE:UTX), Kone (HEL:KNEBV), Yungtay Engineering (TPE:1507), Monte Ascensori (BIT:MSA). Coinciding with the launch of the iPad 2 we also look at companies whose semi-conductor wafer products have been delayed because of the earthquake, to see if investors are nervous about their near-term prospects, namely Shin Etsu Chemical (TYO:4063) and MEMC Electronics (NYSE:WFR).
In an age of opposites (Smartphones are very smart but are not so good at being telephones; and banks have been accused of not lending) it is good to know that virtually no one was stuck in a lift despite the worst earthquake on record.
United Technologies is the proud owner of Otis, which can boast that the inbuilt seismic detector safety system did its job. Bloomberg’s Business Week magazine tells us that, on detection of early tremors, 16,700 lifts automatically took themselves to the ground floor to release their passengers and then took themselves out of action until Otis engineers gave the all-clear. All but 300 were restarted within days. It is no surprise to see short interest at an annual low in United Technologies. Yet, ownership of institutional funds who lend remains below where it was pre-credit crisis, at 22% of total shares. It should be pointed out that Otis is only one of the company’s businesses.
The company dominating the European lift scene is Finland’s Kone. Its shares have increased by 300% since December 2008 and we see very low short interest. The increasingly generous dividends have led to greater dividend enhancement trading. Just recently, Kone announced a share buy-back.
Taiwan’s Yungtay Engineering is another major player in managing the “flow of people.” Ownership from international funds who lend quadrupled in the past two years and demand to borrow is very low.
Italy’s local lift specialist is Monti Ascensori and it is too small to feature heavily when it comes to monitoring investor sentiment via securities lending information. That said, the shares are sliding downwards and it was once heavily borrowed in mid 2008.
It is somewhat unfair to single out two companies given the vast number of firms affected in some way by the earthquake but, IHS iSuppli (which tracks all aspects of the consumer electronics manufacturing process) has singled out Shin Etsu Chemical and MEMC Electronics. They note that “the Japanese earthquake has resulted in the suspension of one-quarter of the global production of silicon wafers used to make semiconductors.” Shin Etsu saw a build in the demand to borrow ahead of the disaster. This continued to rise, although short interest remains below 2% of total shares outstanding on loan. Funds who lend this company remain bullish, however, owning 17% of total shares, which is a 12 month high. The situation is similar for US listed MEMC Electronics with marginally rising short interest at 4% of total shares, but strongly rising institutional ownership to 33% of the company.
