German Short Positions – Nordex is hot name among hedge funds

We present the most significant changes in Germany’s shorts that have taken place since the US presidential election. We focus on a German wind turbine designer & manufacturer, whose short interest more than doubled since November 8th.

Top 5 German Short Positions
German Short Positions
German Short Positions

Table 1: Most Shorted in Germany

Table 1 shows Germany’s top 5 most shorted stocks(*). Germany’s most shorted ranking remains mixed and well diversified sector-wise. The most heavily shorted stock remains K+S (Agricultural Chemicals) and is, with significant short interest at 18.40%, also 2nd most heavily shorted EU stock in our records. K+S is followed by: Heidelberger Druckmaschinen (Industrial Machinery & Equipment), Wirecard (Business Support Services), Nordex (Heavy Electrical Equipment) and Deutsche Lufthansa (Airlines). Interestingly, Lufthansa is the only DAX component in our top 5.

The most noticeable changes vs prior to the US elections are: Nordex breaking into the top 5 and Ströer dropping out of it. The short interest in Nordex more than doubled since November 8th and rose from 4.26% to 8.78% as of December 8th disclosures. During the same period, the short interest in Ströer went down from 8.37% to 7.18%.

In the remainder of this post, we focus on Nordex, its largest short position holders and on circumstances that might have contributed to rise of this short.

Nordex, Trump & Wind Turbines

In the past weeks US president-elect Donald Trump has made his position about renewables clear and he openly campaigned against Scottish (BBC: “Trump attacks ‘awful’ Scottish wind farms”) and German wind farms (Handelsblatt: “Trump’s Beef with German Wind Power”). While it is impossible to know how much precisely these views contributed to the rise of the Nordex shorts, below observations might provide some insights into this.

As depicted in Chart 1, significant shorts in Nordex started building up slowly in mid-August this year. However, Nordex shorts have undergone a big buildup in the past few months, making it one of the fastest rising shorts on our radar. They went from about 4% to 8.78% since the US elections on November 8th. The significant Nordex short is spread among 9 position holders, and we estimate its overall value to be about 160 million Euros.

German Short Positions

German Short Positions

 

Chart 1: Nordex’s short position development

Significant shorts got first initiated by Miura Global Management and Coatue Management, but both these shorts were closed prior to US elections. Five position holders, including AQR and AKO Capital, came into US elections with active significant short positions. The latest buildup in shorts since November 8th was to a considerable extent driven by Marshall Wace. Marshall Wace is also top position holder with 2.21%, followed by AKO Capital at 1.22% and WorldQuant at 1.21%. One of the most recent short position holders is Jim Simons’ Renaissance Technologies that opened a 0.56% short on December 1st.

Interestingly, in spite of shorting activity detailed above, the Nordex stock price remains relatively stable after the initial price drop of about 15% during the first two days following the US presidental elections.

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(*) Data presented in this note is limited to significant short positions which at least equal 0.5% of company issued capital. Data presented in this note is as of December 8th, 2016.

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