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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
SYMBOLISSUE NAMENO. OF SHARESNET CHANGE
LUNLUNDIN MINING CORPORATION62,894,431911,969
NGDNEW GOLD INC.47,205,108(1,513,935)
MFCMANULIFE FINANCIAL CORPORATION46,959,2848,066,084
OSKFFOSISKO MINING CORPORATION J43,720,7907,933,936
ATHOFATHABASCA OIL CORPORATION J38,388,4081,099,290
TLMTALISMAN ENERGY INC.37,765,86313,433,253
CLSCELESTICA INC. SV36,833,550(347,600)
KGCKINROSS GOLD CORPORATION34,441,544(15,964,191)
BBD.BBOMBARDIER INC. CL 'B' SV33,988,500(2,134,305)
LEGPFLEGACY OIL + GAS INC.29,114,197(301,031)
TRITHOMSON REUTERS CORPORATION28,979,682(179,826)
ENBENBRIDGE INC.28,256,7863,660,939
DRGDFDETOUR GOLD CORPORATION J27,411,9738,765,669
GWOGREAT-WEST LIFECO INC.26,896,3414,324,076
HSEHUSKY ENERGY INC.26,681,3485,877,533
EFNELEMENT FINANCIAL CORPORATION J26,073,2754,214,777
ELDELDORADO GOLD CORPORATION25,731,228(14,960,688)
RYROYAL BANK OF CANADA24,135,747(5,637,597)
BCEBCE INC.24,118,1179,871,291
ABXBARRICK GOLD CORPORATION24,026,84719,203,343

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 (NGD), Kinross Gold (KGC), Osisko Mining (OTCPK:OSKFF), Detour Gold (OTCPK:DRGDF), Eldorado Gold (EGO) and Barrick Gold (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 (RY), and a major Canadian pipeline company, Enbridge (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.

(click to enlarge)

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
SYMBOLISSUE NAMENO. OF SHARESNET CHANGE
ABXBARRICK GOLD CORPORATION24,026,84719,203,343
TLMTALISMAN ENERGY INC.37,765,86313,433,253
SUSUNCOR ENERGY INC.18,870,30912,639,574
BCEBCE INC.24,118,1179,871,291
ATAATS AUTOMATION TOOLING SYSTEMS INC.20,555,7779,684,249
BNKBANKERS PETROLEUM LTD. J22,409,2969,435,613
DRGDFDETOUR GOLD CORPORATION J27,411,9738,765,669
TRQ.RTTURQUOISE HILL RESOURCES LTD. RT8,616,1188,616,118
NVANUVISTA ENERGY LTD.20,665,7238,488,479
MFCMANULIFE FINANCIAL CORPORATION46,959,2848,066,084
COSCANADIAN OIL SANDS LIMITED17,147,8527,979,210
OSKFFOSISKO MINING CORPORATION J43,720,7907,933,936
HNDHORIZONS BETAPRO NYMEX NAT GAS BEAR+ETF A UN8,947,1097,388,450
HSEHUSKY ENERGY INC.26,681,3485,877,533
BPOBROOKFIELD OFFICE PROPERTIES INC.20,777,7385,442,294
CNRCANADIAN NATIONAL RAILWAY CO.8,218,9005,328,275
CVECENOVUS ENERGY INC.9,072,3015,120,672
POWPOWER CORPORATION OF CANADA SV16,081,6274,830,228
FRFIRST MAJESTIC SILVER CORP. J11,433,8374,333,631
GWOGREAT-WEST LIFECO INC.26,896,3414,324,076

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
SYMBOLISSUE NAMENO. OF SHARESNET CHANGE
AUYYAMANA GOLD INC.6,745,071(17,008,269)
FMFIRST QUANTUM MINERALS LTD. J6,348,683(16,167,465)
KKINROSS GOLD CORPORATION34,441,544(15,964,191)
TRQTURQUOISE HILL RESOURCES LTD.16,812,183(15,452,104)
ELDELDORADO GOLD CORPORATION25,731,228(14,960,688)
BAM.ABROOKFIELD ASSET MANAGEMENT INC. CL 'A' LV6,144,141(8,728,787)
ECAENCANA CORPORATION10,562,409(7,512,430)
CCOCAMECO CORPORATION9,998,339(6,109,895)
XIUISHARES S&P/TSX 60 INDEX FUND UNITS17,593,527(5,758,615)
RYROYAL BANK OF CANADA24,135,747(5,637,597)
GIB.ACGI GROUP INC. CL 'A' SV23,945,844(4,827,764)
BMOBANK OF MONTREAL18,108,013(4,041,464)
MEGMEG ENERGY CORP.18,008,595(2,875,735)
MVNMADALENA ENERGY INC.28,110(2,695,100)
IGMIGM FINANCIAL INC.8,394,597(2,608,080)
SCSHOPPERS DRUG MART CORPORATION1,785,395(2,375,380)
FCUFISSION URANIUM CORP.1,579,556(2,253,980)
CPGCRESCENT POINT ENERGY CORP.9,346,401(2,242,614)
HOUHORIZONS BETAPRO NYMEX CRUDE OIL BUL+ETF A UN3,862,741(2,228,290)
SLFSUN LIFE FINANCIAL INC.17,803,172(2,199,575)

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 (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 (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.

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Source: Top 20 TSX Short Positions Dec. 15