Big Short Activity In These 5 Canadian Names

Checking in on some big swings that have occurred over the past couple of weeks.

| More on:
The Motley Fool

A couple of times each month the Toronto Stock Exchange puts out its Top 20 Largest – Consolidated Short Position report.  And while it’s interesting to see which names pop up at the top of the list — this month it happens to be Lundin Mining (TSX:LUN) – perhaps more interesting are the changes that have occurred since the prior report was released.

The table below provides a look at the big movers in the recently released, end of July report.

Company Name

As of July 31

As of July 15

% Change

Encana Corp. (TSX:ECA)     30,267,766

18,964,005

59.6%

BCE Inc. (TSX:BCE)

23,279,961

18,527,517

25.6%

Bombardier (TSX:BBD.B)

39,809,879

47,946,864

-17.0%

Great-West Life (TSX:GWO)

23,269,939

32,240,879

-27.8%

Manulife (TSX:MFC)

34,724,527

56,871,917

-38.9%

Source:  TMX Group

During this period, Encana reported reasonable earnings, however the real catalyst for this company will be the release of its strategic review by the end of the year.  Clearly, some are doubting that this review will be well received by the market.

BCE didn’t even appear on this list at the end of June and is clearly feeling the impact of Verizon’s announcement that it may be coming to Canada.  Because of its healthy yield, BCE is a tough stock to short.  You see, short sellers are responsible for covering the dividend.  Therefore, an extra level of conviction is required to take this kind of position against such a big yield.  Conversely, the proceeds from a BCE short sale could be dumped into a long position that carries a similar yield to help cover this burden.

Bombardier missed its self-imposed deadline for its C-Series first flight at the end of June but seemingly did a good job of re-assuring the market that this really wasn’t a big deal.

And the more buoyant interest rate environment of late has clearly had an impact on the shorts that had targeted the Canadian life co’s.

Manulife especially has experienced an even more dramatic decline if we consider that in the middle of June it was the most heavily shorted stock, according to the TMX, in the Canadian market at 82 million shares.  This position has unwound by nearly 50 million shares since then.

Foolish Takeaway

To be clear, often times these short positions will only represent a portion of a bigger trade that an institutional money manager might have in place.  However, there’s something to be said for such dramatic swings.

The Motley Fool has created a special FREE report that that identifies 3 U.S. businesses that are so dominant no short-seller in their right mind should ever think of touching them.  Simply click here to receive “3 U.S. Stocks Every Canadian Should Own” – FREE! 

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler does not own shares in any company mentioned at this time.  The Motley Fool doesn’t own shares in any of the companies mentioned.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

money goes up and down in balance
Investing

Unveiled: 2 Must-Watch Stocks for Your TFSA Before 2025

Value-conscious TFSA investors should consider Bank of Nova Scotia (TSX:BNS) and another great dividend pick.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »

how to save money
Dividend Stocks

Got $1,000? The 3 Best Canadian Stocks to Buy Right Now

If you're looking for some cash flow from your $1,000 investment, these are the ideal investments to make.

Read more »

Data center servers IT workers
Tech Stocks

Better Buy: Shopify Stock or Constellation Software?

Let's dive into whether Shopify (TSX:SHOP) or Constellation Software (TSX:CSU) are the better options for growth investors in this current…

Read more »

Electricity transmission towers with orange glowing wires against night sky
Investing

Fortis Rose 11% in 90 Days, and it’s Still a Good Stock to Buy Now

Here's why Fortis (TSX:FTS) is among the top dividend stocks I think long-term investors want to own in this current…

Read more »

grow money, wealth build
Investing

1 Canadian Growth Stock Poised to Outperform in 2025

Restaurant Brands International (TSX:QSR) is a top growth stock that also has a massive yield and a depressed P/E multiple…

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Is Imperial Oil Stock a Buy, Sell, or Hold for 2025?

Valued at a market cap of $55 billion, Imperial Oil pays shareholders a growing dividend yield of 2.4%. Is the…

Read more »