Stop short-selling our stock! Energy World gets sniffy with shorters
Link copied to
Short selling has gotten up one company’s nose so much it’s complained to banks and the ASX.
Natural gas seller Energy World Corporate (ASX:EWC) says “an unusually high portion” of daily trading is coming from short sellers.
It says gross shorts have neared 100 per cent of trading volume.
Short selling is when investors sell a security they have borrowed — but do not own — in the expectation that prices will fall and they can buy the stock back at a lower price.
Naked short selling is when a trader sells the stock without borrowing the security first or ensuring they have access to a security that is tradable.
However, belyingEnergy World’s complaint is ASIC data, which reports the cumulative volume of shorted stock in all ASX companies.
Over the week to April 18, the cumulative volume of Energy World Corporate’s shares being shorted hovered between 0.8 per cent to 0.9 per cent.
Short selling volumes are considered to be high when around 5 per cent of a company’s issued shares are being shorted.
The company has 1.2 billion shares on issue.
“We have written to the bank(s) who have been facilitating this process through stock lending arrangements, asking them to review whether this type of lending practice is acceptable,” Energy World Corporate said.
It primly noted “the new level of banking ethics that are expected post the subprime lending era”.
It also alleged that a shareholder has been trying to reclaim their shares from a bank to stop them being short sold, but is being blocked from doing so.
Energy World Corporate has been contacted for comment.
The company’s shares have been on a downward streak since the start of the year, and closed Thursday at 18.5c, just about the 52-week low