Inghams Group Ltd (ASX: ING) shares are the most shorted (aka short-sold) on the entire Australian Stock Exchange, according to ASIC’s most recent aggregated short position report.
A whopping 16.7% of shares in the company are held as short positions. This may be gibberish to you at this point, but fear not, short selling is explained below…
What Does Short Selling Mean?
Please view the below video from the Rask Finance website to quickly understand how short selling works.
Why Are Inghams Shares So Heavily Shorted?
Inghams is one of Australia’s largest poultry/chicken providers, supplying fresh and frozen chicken and turkey products to food service outlets.
Although we can’t know the exact rationale of Ingham’s short sellers, here a few two possible reasons…
First, in late February, Inghams released its 2019 Half Year Report, in which it reported a 5.3% decline in Underlying Net Profit After Tax. This was caused by a steep increase in feed costs, stemming from the ongoing drought conditions in Australia. Those shorting the company may believe these conditions will continue to persist and drag down profits.
Then in April, news broke that TPG Capital was seeking to sell down up to $214 million of their stake in Inghams. TPG is one of the largest private equity investment firms in the world. TPG’s transactions are closely watched by market participants, and their sale of Inghams shares could have stimulated additional short positions.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of publishing, William does not have a financial interest in Inghams Group.