Forthcoming US Earnings - The Short Perspective

Amongst the mass of US companies announcing results this week, the sectors of note are Hoteliers, Financials and Energy. We look at investor sentiment in: Exxon Mobil Corp (NYSE:XOM), Anadarko Petroleum Corp (NYSE:APC), Marathon Oil Corp (NYSE:MRO), BP Plc (LON:BP), Starwood Hotels & Resorts Worldwide (NYSE:HOT), Las Vegas Sands (NYSE:LVS), News Corp (NASDAQ:NWSA), MasterCard Inc (NYSE:MA) and Visa Inc (NYSE:V).

Starwood Hotels and Resorts reports earnings on Thursday. Its share price reached a new annual high recently as the company continues its expansion into Asia. Short sellers have gradually covered their positions to 6.9% of total shares outstanding after short interest reached 8% in late August. The hotelier still has convertible bonds in issue which may inflate demand to borrow the stock.

The world’s largest casino and gaming stock, Las Vegas Sands Corp, also holds hotels amongst its portfolio. The company was heavily shorted during 2010 after the share price surged more than 200% to over USD 50. However, short interest plummeted from over 10% to 0.3% of total shares outstanding on loan since September. Holdings of long only funds who lend, which can be used as a proxy for institutional ownership, have increased marginally from 62 million to 66 million shares over the past quarter.

Visa and MasterCard are both due to report earnings this week. Short interest in MasterCard remains low at 0.2%, whilst institutional ownership also remains flat at 31 million shares. Investors have been gradually reducing short positions in Visa from 6% to 4.5% of total shares outstanding over the past quarter.

Oil and Energy companies are not generally heavily shorted. Exxon Mobil and BP have both recently signed a major offshore oil exploration agreement with Russian oil company OAO Rosenfelt. Exxon’s share price continues to rally reaching new 52 week highs. Short interest is low, but has doubled over the last quarter to 0.4% of total shares outstanding on loan. BP, which is due to report earnings on Tuesday, saw short interest peak at just 2% of total shares following the oil spill disaster last year. This has now reduced to a low of 0.9% of total shares. As the share prices of Anadarko Petroleum and Marathon Corp continue to rally ahead of earnings announcements, short interest is low at 0.4% of total shares outstanding on loan in both stocks.

Finally, News Corp, which continues its battle for BSkyB, is due to report second quarter 2011 results on Wednesday. Short interest has decreased from 1.4% to 0.7% of total shares outstanding on loan since November as the share price continues its rally. Institutional investors reduced their holdings since November from 520 million to 480 million shares.

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