Showing posts with label Debenhams. Show all posts
Showing posts with label Debenhams. Show all posts

Monday, 11 August 2014

Short-sellers target Sainsbury's on Tesco fears

News in The Telegraph that short-sellers in the stock-market are betting that Sainsbury's share-price will fall as a result of Dave Lewis sacrificing Tesco margins to regain market share, offers a valuable insight-tool for NAMs wishing to anticipate additional pressures on the retail-buyer in the supplier-retailer relationship i.e. buyers are increasingly remunerated by share-options in their own company.

In short-selling Sainsbury's shares, the market believes that Tesco has more scope for cutting prices than Sainsbury's bottom line would allow.

As you know, short-selling is a process whereby stock-market traders bet that the share-price will fall by borrowing shares of a company, then selling  them 'short' at the current price. They then hope to buy them in the market at a lower price when it is time to fulfill the contract, thus making a profit on the deal...

The percentage of a company's shares 'on loan' in this way can be tracked (see Short Tracker) and the greater the percentage, the more shorting of the stock is going on, meaning that the market believes that the share-price will fall.

For instance, Short Tracker's details this morning on the top most-shorted retailers are as follows: (the % is the amount of a company's shares currently 'borrowed')
-  WH Smith        11.4%
-  HMV                 8.1%
-  Sainsbury's         8.0%
-  Ocado               5.6%
-  Morrisons          4.72%
-  Debenhams        3.13%

Another NAM tool to add to your repertoire!

Thanks to Richard for his persistence re this short-sell pointer.

NB. Should you be tempted to try some short-selling, it must be emphasised that the bet is on the price going down. If, for whatever reason (i.e. a sudden takeover bid) the share price rises, and the rise can be infinite, the short-seller is still legally liable for fulfillment of the contract, thereby losing the difference between the latest purchase price and the selling-price on the sell-contract.....!

NB. We wish to stress that we are in no way recommending dealing in shares, we are simply making observations re market activity in retail and other stocks in which our readers may be interested as part of the supplier-customer trading relationship.