Top 20 TSX Short Positions Dec. 15

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 |  Includes: ABX, AUY, BBRY, EGO, ENB, KGC, LUNMF, NGD, OSKFF, RY, TMXXF
by: Chris Damas

I find it instructive to follow the TSX, NYSE and NASDAQ bi-weekly short position reports as they often times provide important investor information.

These reports are available by subscription, from the TMX Group or via media outlets such as The Wall Street Journal. Free public information is available several days after paid subscription data has already been released.

If readers find this report of interest, I will make it a regular contribution as soon as the TSX data is released.

A large short position relative to the public float and daily trading volume is often a sign unexpectedly good news or a general market upswing could boost the stock more than expected, the so-called "short-covering rally."

Alternatively, a large short position might indicate investors know there are undisclosed problems at a company, or that disclosed problems could get worse. More research should be done by an investor to determine what these problems might be prior to assuming a long or short position.

Here were the top twenty short positions on the Toronto Stock Exchange as of December 15, 2013 (source TMX Group).

CONSOLIDATED SHORT POSITIONS AS OF DECEMBER 15, 2013
SYMBOL ISSUE NAME NO. OF SHARES NET CHANGE
LUN LUNDIN MINING CORPORATION 62,894,431 911,969
NGD NEW GOLD INC. 47,205,108 (1,513,935)
MFC MANULIFE FINANCIAL CORPORATION 46,959,284 8,066,084
OSKFF OSISKO MINING CORPORATION J 43,720,790 7,933,936
ATHOF ATHABASCA OIL CORPORATION J 38,388,408 1,099,290
TLM TALISMAN ENERGY INC. 37,765,863 13,433,253
CLS CELESTICA INC. SV 36,833,550 (347,600)
KGC KINROSS GOLD CORPORATION 34,441,544 (15,964,191)
BBD.B BOMBARDIER INC. CL 'B' SV 33,988,500 (2,134,305)
LEGPF LEGACY OIL + GAS INC. 29,114,197 (301,031)
TRI THOMSON REUTERS CORPORATION 28,979,682 (179,826)
ENB ENBRIDGE INC. 28,256,786 3,660,939
DRGDF DETOUR GOLD CORPORATION J 27,411,973 8,765,669
GWO GREAT-WEST LIFECO INC. 26,896,341 4,324,076
HSE HUSKY ENERGY INC. 26,681,348 5,877,533
EFN ELEMENT FINANCIAL CORPORATION J 26,073,275 4,214,777
ELD ELDORADO GOLD CORPORATION 25,731,228 (14,960,688)
RY ROYAL BANK OF CANADA 24,135,747 (5,637,597)
BCE BCE INC. 24,118,117 9,871,291
ABX BARRICK GOLD CORPORATION 24,026,847 19,203,343
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The top short position was in base metal producer Lundin Mining (OTCPK:LUNMF), which has been short much of the year. Lundin rallied sharply with the overall market rally on December 18 as the US Federal Open Market Committee meeting came to its conclusion without negative news.

It may have helped Lundin that the TSX short interest report was released at 1 pm on the same day, showing its big short position (10.8% of the outstanding). I don't follow Lundin, but if you were interested in this stock, you should be monitoring and investigating its big short interest.

The TSX report is issued three business days after the data is collected.

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If a TSX stock is listed on another major exchange, it is wise to check the short position and consolidate the two to determine the total short interest.

The Lundin short position on the OTC BB was only 1.29 million shares as of December 13, and therefore was inconsequential relative to the TSX.

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As one would expect, the top short list includes several gold stocks, namely New Gold (NYSEMKT:NGD), Kinross Gold (NYSE:KGC), Osisko Mining (OTCPK:OSKFF), Detour Gold (OTCPK:DRGDF), Eldorado Gold (NYSE:EGO) and Barrick Gold (NYSE:ABX). Gold stocks have been attracting the "shorts" all year due to the decline in bullion prices.

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Interestingly, the top twenty includes the top Canadian bank stock, the Royal Bank of Canada (NYSE:RY), and a major Canadian pipeline company, Enbridge (NYSE:ENB). As a percentage of the outstanding shares, these represent 1.7% and 3.4%, respectively.

The large Royal Bank short position is probably function of it being the largest market cap stock on the board ($102.5 billion USD) and a proxy to short the Canadian market.

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But the Enbridge short position may indicate growing sentiment its pipeline projects such as Northern Gateway may ultimately not get built due to opposition, in spite of a recent approval.

Other than the total short position and percentage of float, useful information includes the largest changes in short position, the size of the short position relative to trading volume (also called the days to cover) as well as whether the company has any convertible securities outstanding.

Short stock positions designed to profit from the spread between the stock and convertible debt or preferred share issues (called convertible hedges) may indicate the stock could be locked in a trading range rather than indicate that investors are betting in a big way the stock will go down.

Here are the largest increases in short position on the TSX as of December 15, 2013:

BIGGEST INCREASES IN SHORT POSITION DEC 15 vs NOV 30
SYMBOL ISSUE NAME NO. OF SHARES NET CHANGE
ABX BARRICK GOLD CORPORATION 24,026,847 19,203,343
TLM TALISMAN ENERGY INC. 37,765,863 13,433,253
SU SUNCOR ENERGY INC. 18,870,309 12,639,574
BCE BCE INC. 24,118,117 9,871,291
ATA ATS AUTOMATION TOOLING SYSTEMS INC. 20,555,777 9,684,249
BNK BANKERS PETROLEUM LTD. J 22,409,296 9,435,613
DRGDF DETOUR GOLD CORPORATION J 27,411,973 8,765,669
TRQ.RT TURQUOISE HILL RESOURCES LTD. RT 8,616,118 8,616,118
NVA NUVISTA ENERGY LTD. 20,665,723 8,488,479
MFC MANULIFE FINANCIAL CORPORATION 46,959,284 8,066,084
COS CANADIAN OIL SANDS LIMITED 17,147,852 7,979,210
OSKFF OSISKO MINING CORPORATION J 43,720,790 7,933,936
HND HORIZONS BETAPRO NYMEX NAT GAS BEAR+ETF A UN 8,947,109 7,388,450
HSE HUSKY ENERGY INC. 26,681,348 5,877,533
BPO BROOKFIELD OFFICE PROPERTIES INC. 20,777,738 5,442,294
CNR CANADIAN NATIONAL RAILWAY CO. 8,218,900 5,328,275
CVE CENOVUS ENERGY INC. 9,072,301 5,120,672
POW POWER CORPORATION OF CANADA SV 16,081,627 4,830,228
FR FIRST MAJESTIC SILVER CORP. J 11,433,837 4,333,631
GWO GREAT-WEST LIFECO INC. 26,896,341 4,324,076
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Here are the largest decreases in short position on the TSX as of December 15, 2013:

BIGGEST DECREASES IN SHORT POSITION DEC 15 vs NOV 30
SYMBOL ISSUE NAME NO. OF SHARES NET CHANGE
AUY YAMANA GOLD INC. 6,745,071 (17,008,269)
FM FIRST QUANTUM MINERALS LTD. J 6,348,683 (16,167,465)
K KINROSS GOLD CORPORATION 34,441,544 (15,964,191)
TRQ TURQUOISE HILL RESOURCES LTD. 16,812,183 (15,452,104)
ELD ELDORADO GOLD CORPORATION 25,731,228 (14,960,688)
BAM.A BROOKFIELD ASSET MANAGEMENT INC. CL 'A' LV 6,144,141 (8,728,787)
ECA ENCANA CORPORATION 10,562,409 (7,512,430)
CCO CAMECO CORPORATION 9,998,339 (6,109,895)
XIU ISHARES S&P/TSX 60 INDEX FUND UNITS 17,593,527 (5,758,615)
RY ROYAL BANK OF CANADA 24,135,747 (5,637,597)
GIB.A CGI GROUP INC. CL 'A' SV 23,945,844 (4,827,764)
BMO BANK OF MONTREAL 18,108,013 (4,041,464)
MEG MEG ENERGY CORP. 18,008,595 (2,875,735)
MVN MADALENA ENERGY INC. 28,110 (2,695,100)
IGM IGM FINANCIAL INC. 8,394,597 (2,608,080)
SC SHOPPERS DRUG MART CORPORATION 1,785,395 (2,375,380)
FCU FISSION URANIUM CORP. 1,579,556 (2,253,980)
CPG CRESCENT POINT ENERGY CORP. 9,346,401 (2,242,614)
HOU HORIZONS BETAPRO NYMEX CRUDE OIL BUL+ETF A UN 3,862,741 (2,228,290)
SLF SUN LIFE FINANCIAL INC. 17,803,172 (2,199,575)
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Both the largest increase and the largest decrease in a short position over the two-week period were in a gold stock, Barrick Gold and Yamana Gold (NYSE:AUY). Investors should note large trading firms use these highly liquid stocks to hedge positions in other gold stocks, derivatives, bullion, or all three. Volatility is the only constant in shorted stocks, so caution is advised.

It should be noted the most shorted Canadian company stock didn't show up in the TSX top twenty list.

BlackBerry Limited (NASDAQ:BBRY) was the fourth most shorted stock on the NASDAQ with 143.8 million shares as of December 13.

Combined with the 15.4 million short position on the TSX, the total short position of 159.2 million shares represented 30.4% of the outstanding.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.