Weir stock is most shorted on FTSE 100
ENGINEERING firm Weir has become the most shorted stock on the FTSE 100, as investors bet the company’s share price will be dented by weak demand for specialist mining equipment.
Information provided by Data Explorers showed that 13.48 per cent of shares are out on loan – double the amount that were shorted only three weeks ago.
Shares in the firm have increased by 4.9 per cent in the same period.
Shale drilling equipment forms a core part of Weir’s business and plummeting North American gas prices have raised fears that energy outfits will not maintain current levels of investment.
The firm also faces competition from rivals such as Gardner Denver and new Chinese entrants into the market.
“People will be going after it on the basis that the gas price has collapsed and they will be asking how many new fields will open if the price remains weak,” explained Chris Dyett, an analyst at Investec.
“The market is taking a view that you’ve got weak gas prices and increased competition and both will put pressure on margins. But I suspect Weir will do better than the market thinks.”
In the last three months Weir has been on an acquisition spree, buying valve manufacturer Novatech for $176m, wellhead specialist Seaboard Holdings for $675m and launching £200m bid for Australian firm Ludowici.
The only other FTSE 100 stock to be heavily shorted is Capita, with almost nine per cent of shares on loan, followed by Marks & Spencer with 4.7 per cent.
Average short interest across the index is low at 1.4 per cent.
Rank Company Shares on loan
1. Weir Group 13.48pc
2. Capita 8.88pc
3. M&S 4.74pc
4. Vedanta 3.89pc
5. Serco 3.87pc
6. Admiral 3.61pc
7. Aggreko 3.57pc
8. Glencore 3.46pc
9. Intnl Power 3.44pc
10. IAG 3.32pc
Source: Data Explorers