Markit data showed that "short interest" - which measures the number of shares lent to speculators betting on a fall in the stock - in Berkeley had surged to nearly 5 percent of the company's total shares available for loan, against just 2 percent on March 1 and 0.8 percent at the start of 2016.
"This bear raid, which comes on the heels of a sharp retreat in Berkeley's shares since mid-December, represents the first time in over five years that short sellers took a position of about 5 percent of shares outstanding in a UK-listed homebuilder," said Markit analyst Simon Colvin.
An interesting, but ultimately, repetitive posting that doesn't really give me any additional information about this share or your thinking on it. Perhaps if you declared your position on/in it that would help. If I could understand where you were coming from, where you are at and where you are trying to get to I might understand better what you are saying.
Are you long/short or on the sidelines ... are you waiting to get in or out or just watching?
I disagree with the general tone and findings of the article that is quoted. Odey Asset Management have held short positions in BKG since 2014 and recently actually decreased their short position, not increased it as the article implies. Overall OAM are hardly the scintillating agressive shorting outfit that the write up alludes to. More rather they are using the short position to hedge their portfolio against a down turn in the property market ... in other words they are using it as insurance against loss rather than a money making opportunity for profit.
Bluemountain and Anchorage are more recent entrants to the list of shorters but their positions are hardly large -- typically 0.50-0.75%.
Overall this shorting activity is not really something to be concerned about. It's more likely to be funds covering their backs against BREXIT and uncertainty in the property market than a belief in BKG collapsing specifically.
Hedge fund managers are taking short positions against the biggest listed provider of luxury London homes in a bet that weakening emerging markets will put the once buoyant sector into reverse. A small group of funds are targeting the shares of Berkeley Group, the main listed proxy for new high-end London property, amid signs that Asian and Russian buyers are deserting the market.
Odey Asset Management, BlueMountain Capital Management and Anchorage Capital took short positions against the FTSE 100 builder in January, worth 2.2 per cent of its share capital, according to data disclosed to the Financial Conduct Authority. The short positions run against analysts’ consensus that Berkeley is well positioned to continue growing — and indicate the hedge funds believe pricing and transaction levels for luxury London homes have further to fall. The market for luxury London homes faltered last year after being driven upwards in the previous few years, partly by overseas buyers seeking a bolthole or a safe haven for their cash. Many foreign buyers have suffered from a weakening of emerging market currencies and an increase in stamp duty on expensive homes. Prices paid per square foot for homes costing more than £1m fell by 2.7 per cent in 2015 after two consecutive years of 10 per cent rises, according to the data provider LonRes. Anthony Codling, an analyst at Jefferies, the investment bank, said he had spoken to hedge funds looking to bet against Berkeley. “They think overseas demand is falling away and there are pockets of oversupply in new-build homes, which will reduce selling prices for Berkeley and bring their share price down,” he said.
Berkeley’s shares have risen 25 per cent in the past year, fuelled by rising sales. The company declined to comment. About 54,000 homes are planned or under construction in the most expensive areas of the capital, with most of these set to be priced at £1m or more, research by LonRes found last year — even though only 3,900 homes worth more than £1m were sold in these areas in 2014. Mr Codling said he did not agree with the case for shorting Berkeley. The company’s shares are trading at 2.7 times book value after it set out a plan to pay out £16.34 per share in dividends by 2021. “As long as investors get that cash return I don’t see significant downward pressure on the share price,” said Mr Codling. Charlie Campbell, analyst at Liberum, said there were concerns that overseas buyers who paid deposits of 10 or 20 per cent on off-plan London flats might struggle to pay the balance on completion if their home currencies have since weakened.
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