The Boeing Company (NYSE:BA) continues to be the most heavily invested hedge fund long holding in the aerospace industry despite of the series of technical problems that were witnessed in its Dreamline planes. At the end of Q2, a total of 70 hedge funds have a position in the company, and 4% of equity cap is held by these funds, according to data from Goldman Sachs.
Some key points from Deutsche Bank’s monthly hedge fund trends:
Short interest rising in Japanese airlines
The problems with The Boeing Company (NYSE:BA)’s jets did not bring any considerable increase in short interest in the company which stood at 1% at the end of Q2, however Japanese airline ANA Holdings Inc (OTCMKTS:ALNPY) (TYO:9202) which relies on Boeing’s planes has seen an increase in short positions. Short interest in ANA was up to 7.1% at the end of July, after a 12% rise in negative bets. ANA, All Nippon Airways, had to ground the entire fleet of Dreamliners 787 for four months beginning in January of this year, bringing billions of yen in losses for the Japanese airline. The problems with Boeing’s Dreamliners have not subsided yet—just a couple of days ago the airlines were checking the planes for a new set of wiring problems that caused defects in the fire-suppression system, and before that the Dreamliners had some faults in their batteries which caused them to overheat.
Deutsche Bank reports that hedge funds gained 0.93% in July, netting a median performance of 4.85% on the year. In L/S equity strategy, European L/S was up 8.17% YTD, U.S L/S gained 9.21% YTD and Japan L/S was up 17.21% YTD.
Sony, Sharp also seeing negative interest
Other Japanese companies that are seeing a spike in short activity are Sony Corporation (NYSE:SNE) (TYO:6758) and Sharp Corporation (OTCMKTS:SHCAY) (TYO:6753), points out Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB). In particular, the electronics company Sharp Corporation (OTCMKTS:SHCAY) (TYO:6753) witnessed a 32% increase in shorts in the last month, and the total short interest is now at 6.1% of outstanding shares. Sharp has taken in a 32% appreciation in share price over the year, and Deutsche Bank points out that the company is not expected to report a profit until the latter part of this year.
Cliff Asness’ AQR Capital had a 0.57% short in Sharp, until the first week of August. Other heavily shorted Japanese companies are KURODA ELECTRIC CO., LTD. (TYO:7517) with 11.6% short interest and Kadokawa Corp (TYO:9477).
July hot month for M&A activity
M&A had a booming month in July, being second only to the golden period of the pre-Lehman era markets. The total worth of the agreements that were inked in July was up to $237 billion, finds Deutsche Bank. Some key mergers and buyouts that took place in last month were, Loblaw Companies Limited (TSE:L)’s buyout of Shoppers Drug Mart Corporation (TSE:SC), Community Health Systems (NYSE:CYH) acquisition of Health Management Associates Inc (NYSE:HMA) and Perrigo Company (NYSE:PRGO)’s buyout of Elan Corporation, plc (NYSE:ELN).