Most shorted ahead of earnings: Fossil Group, Norwegian Air Shuttle & Domino’s Pizza Enterprises

We reveal how short sellers are positioning themselves in companies announcing earnings in the coming week:

• Short sellers selective ahead of US retailer earnings
• Covering into earnings for Norwegian Air Shuttle
• Australian market no pizza party for Domino’s

North America

In the US, retail is on the menu for short sellers this week.

Perennial short favorite Fossil Group reports on Tuesday, and short positions have increased 17% in the last month. In fact, the notional short borrow demand has nearly returned to the level it was a year ago – after declining in size as the price was cut in half in the first two quarters of 2017. Short demand is currently equal to 35% of shares outstanding, up from 12% at the start of 2017.

Under Armour has also seen a marginal increase in short demand ahead of reporting; however, shorts have essentially held a flat position in share terms, which has declined in step with the price over the last 12 months.

It’s worth noting that the two retail REITs reporting this week have both seen a decline in short demand ahead of earnings. Shares of both firms are trading near 52-wk lows, and following lengthy declines, this may just represent short sellers profit taking on successful trades.

Europe

The last six months have been a roller coaster for investors in Norwegian Air Shuttle,, with shares moving up and down violently in a range between 175 and 250 NOK. In the last month, short demand has declined by 5% of outstanding shares of the firm.

With that said, and despite attempts by the firm to shore up investor confidence, NAS remains the most shorted Norwegian equity at 19% of shares outstanding. Shares have recently moved down from the top to middle of the trading range, so the decline in short demand may also reflect some profit taking.

Asia Pacific

With 18% of shares short, Domino’s Pizza Enterprises, is the third most shorted Australian equity ahead of their earnings report on Wednesday. Short demand is just below the all-time high observed a on February 2nd, indicating that short sellers believe shares have further to fall.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.