Stocks reaching new short interest annual highs and lows

Along with a change in season, September has brought with it a change in investor sentiment towards a number of stocks that have traditionally seen very high short interest. Our weekly screen of stocks reaching new short interest highs and lows over the last two weeks has highlighted interesting securities lending flow in: TomTom NV (AMS:TOM2), Garmin Ltd (NASDAQ:GRMN), Ubisoft Entertainment (EPA:UBI), Salesforce.com Inc (NYSE:CRM), Solarworld Ag(ETR:SWV), Sunpower Corp (NASDAQ:SPWRA) and Asos Inc (LON:ASC).

TomTom NV has remained a heavily shorted stock throughout this year as the company has struggled to adapt to the mapping services in Smartphone applications. Short interest has hovered close to annual highs of 18% of the total shares since June. However, the last six weeks have seen a turn in sentiment as short sellers have rushed to cover their positions, halving short interest to an annual low of 9% of total shares outstanding as the share price has also reached new lows. This shift has been mirrored by institutional investors who lend their shares. This group have reduced their holdings by a quarter from the annual highs in June to 11% of the market cap’. Significantly, the stock is now very hard to borrow, with almost all the lendable supply out on loan.

U.S. listed competitor, Garmin Ltd., has seen a less significant adjustment in securities lending activity, but short interest has increased over the third quarter from 6% to 9% of total shares.

We have highlighted that solar stocks split investor sentiment and typically see levels of short interest coupled with high institutional ownership. However, two stocks have recently bucked this trend and witnessed high levels of short covering, resulting in short interest falling to new annual lows accompanied by annual lows in institutional ownership.

Short interest in Solarworld Ag halved over the third quarter to 6% of the total shares, however this has now increased to 9%. Meanwhile, institutional ownership has also more than halved in this time.

Sunpower Corp. saw short interest peak at 40% of the total shares in April, but shorts have covered aggressively, bringing it down to an annual low of 11%. Institutional ownership has also tumbled by 75% since April to annual lows of 13% of total market cap’. It must be noted that this stock may be subject to convertible arbitrage as there are several convertible bonds in issue.

Salesforce.com has been taking cloud computing by storm. Institutional investment by funds who lend has reached an unprecedented high of 30% of total shares as the share price continues to perform well. However, stock on loan has reached an annual high of 9.5% of total shares. There is a convertible bond in issue which could lead to some inflation in the quantity of stock on loan due to arbitrage trading.

French listed gaming company, Ubisoft Entertainment SA, has seen its share price drift downward to reach new annual lows. Short interest has held steady over this year at 6% of total shares, but the third quarter brought on a bout of short covering. Short interest reached a new annual low of 2.5% of total shares last week as the share price also reached a new low. On the long side of the market, institutional investors have reduced their holdings by two thirds over the third quarter to 12% of the total market cap’.

Asos Plc is an online retailer that has performed outstandingly well. As the share price has fallen from its annual high, shorts have covered their positions reducing short interest to annual lows of 3% of total shares. On the long side, institutional ownership of funds who lend has reached its highest level this year at almost 10% of the market cap’.