Data Explorers yesterday published a study which shows that short sellers are increasingly focusing on companies with high net debt to equity ratios. Widening spreads between 3 month Libor and 3 month US swap rates could indicate that banks are becoming more reluctant to lend to the corporate market as inflation expectations begin to rise. This would have a negative impact on companies’ ability to refinance or raise new debt in the market. Companies of note in the report include: Yell (YELL), Debenhams, Grupo Ferrovial (OTC:GRFRF), Sacyr Vallehermoso, Caterpillar (CAT) and AutoZone (AZO).
We have combined Factset’s screening tools with our proprietary indicators to highlight the top ten companies in the US, Europe ex UK, Japan and the UK which have a high net debt to equity position combined with high and rising short interest.
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