Top 20 TSX Short Positions Dec. 31

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 |  Includes: AG, ARNGF, ATHOF, ATSAF, BBRY, BCE, BDRBF, BNKJF, BPO, CFPZF, CLS, COSWF, CTRX, CWEGF, DPMLF, DRGDF, ECA, ELEEF, GIB, GIL, GTE, LBLCF, LEGPF, MEGEF, NGD, NUVSF, OSKFF, POT, PWCDF, PWE, RCI, SHDMF, SLF, TAC, TAHO, TCPTF, TGA, TRI, TRMLF, TU, VRX, VZ
by: Chris Damas

Investors in Canadian stocks should read the Toronto Stock Exchange short report, as it sometimes reveals interesting information as to the size of bets against stock prices. I have tried to make some improvements relative to the initial edition of this article.

The Canadian gold stocks were the most heavily shorted according to that report, and interestingly, some of them have rallied smartly now that tax loss season has finished. This time, I have sorted for TSX-listed stocks with at least 10 million shares short (66 names) and then consolidated their TSX short position with their short on any US exchange they are listed on, to get an aggregate short position.

I sorted by the percentage of shares outstanding that are short rather than the absolute number, because big companies would otherwise show up on the top shorted list purely due to size. You'll be quick to point out that my method may miss a relatively heavily shorted small cap stock with less than 10 million position. That's true, but I'd rather avoid the smaller cap stocks, because illiquidity can hurt you if you are trading these issues.

One final embellishment is adding the US stock symbol for easy access to charts and quotes on Seeking Alpha. However, I note the Canadian symbol and listing is quite often the more liquid one. And you have the currency effects by looking at the US price chart exclusively.

The top twenty relatively most shorted TSX-listed stocks as of December 31 were as follows:

CONSOLIDATED SHORT POSITIONS AS OF DECEMBER 31, 2013
SYMBOL ISSUE NAME TSX Dec31 US Dec13 TOTAL SHORT SHARES OUT % SHORT
(NASDAQ:BBRY) BLACKBERRY LIMITED 13,068,074 143,816,515 156,884,589 526,000,000 29.8%
(TC) THOMPSON CREEK METALS COMPANY INC. 16,178,200 28,858,949 45,037,149 171,452,000 26.3%
(OTCPK:ATSAF) ATS AUTOMATION TOOLING SYSTEMS INC. 20,398,752 16,643 20,415,395 88,676,000 23.0%
(OTCPK:DRGDF) DETOUR GOLD CORPORATION J 23,987,694 3,235,043 27,222,737 138,514,000 19.7%
(NASDAQ:TGA) TRANSGLOBE ENERGY CORPORATION J 14,188,370 222,084 14,410,454 73,971,000 19.5%
(OTCPK:CWEGF) CREW ENERGY INC. 22,653,398 212,834 22,866,232 121,635,000 18.8%
(OTCPK:LEGPF) LEGACY OIL + GAS INC. 29,210,825 50,443 29,261,268 157,232,000 18.6%
(NYSE:CLS) CELESTICA INC. SV 28,638,415 158,650 28,797,065 163,400,000 17.6%
(OTC:NUVSF) NUVISTA ENERGY LTD. 21,680,156 57,411 21,737,567 134,903,000 16.1%
(NYSE:TAHO) TAHOE RESOURCES INC. J 19,169,922 1,369,872 20,539,794 146,004,000 14.1%
(OTC:ELEEF) ELEMENT FINANCIAL CORPORATION J 23,993,221 1,133,920 25,127,141 184,519,000 13.6%
(OTCPK:LBLCF) LOBLAW COMPANIES LIMITED 20,925,316 14,183,660 35,108,976 282,292,000 12.4%
(NYSE:GIB) CGI GROUP INC. CL 'A' SV 24,629,593 7,088,636 31,718,229 276,014,000 11.5%
(OTCPK:DPMLF) DUNDEE PRECIOUS METALS INC. 13,186,210 2,075,918 15,262,128 138,976,000 11.0%
(NYSE:GIL) GILDAN ACTIVEWEAR INC. 12,268,197 796,796 13,064,993 121,951,000 10.7%
(LUNDF) LUNDIN MINING CORPORATION 60,372,644 1,289,260 61,661,904 584,443,000 10.6%
(OTCPK:OSKFF) OSISKO MINING CORPORATION J 43,675,171 2,456,586 46,131,757 439,189,000 10.5%
(NYSE:AG) FIRST MAJESTIC SILVER CORP. J 10,487,766 1,535,973 12,023,739 117,025,000 10.3%
(NYSEMKT:NGD) NEW GOLD INC. 46,377,287 5,201,762 51,579,049 503,318,000 10.2%
(OTCPK:ATHOF) ATHABASCA OIL CORPORATION J 37,568,553 1,091,397 38,659,950 400,823,000 9.6%
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I don't profess to automatically be an expert in the most shorted stocks, but I can make a few observations. And when I do know or own one of them (hopefully both), a big short position can make me dig deeper to find out whether the shorts know something I should also find out.

BlackBerry has rallied in spite of having the largest short position of any Canadian company on NASDAQ as of December 13. Quite often when a "short" becomes too popular, the stock can only rally, especially one with cash in the bank and little debt.

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People hated Thompson Creek Minerals too, and it has rallied. In this case, I knew the stock and luckily, dumped it at $7.50 a few years ago. They were having problems with their Mount Milligan copper and gold mine. I guess things haven't improved much since then.

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One short that sticks out is THE largest Canadian food retailer Loblaw Companies. The big short could reflect, however, Loblaw's impending take over of retail rival Shoppers Drug Mart (OTCPK:SHDMF), but it certainly has paid off for those betting against the stock sine it was announced.

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Since the top twenty shorts did not bring forth some real nuggets, I am reproducing the next twenty, because this list contains some telecom and wireless stocks I like, namely Rogers Communications and BCE Inc.

SYMBOL ISSUE NAME TSX Dec31 US Dec13 TOTAL SHORT SHARES OUT % SHORT
(OTCPK:CFPZF) CANFOR CORPORATION 12,321,129 309,776 12,630,905 140,283,000 9.0%
(OTCPK:TRMLF) TOURMALINE OIL CORP. 16,669,958 352,540 17,022,498 189,397,000 9.0%
(NASDAQ:CTRX) CATAMARAN CORPORATION 12,987,688 4,938,670 17,926,358 206,298,000 8.7%
(OTCPK:BNKJF) BANKERS PETROLEUM LTD. J 22,068,084 92,060 22,160,144 255,552,000 8.7%
(OTCPK:MEGEF) MEG ENERGY CORP. 17,903,858 782,291 18,686,149 222,502,000 8.4%
(OTCPK:ARNGF) ARGONAUT GOLD INC. J 11,219,782 506,558 11,726,340 149,060,000 7.9%
(NYSE:RCI) ROGERS COMMUNICATIONS INC. CL 'B' NV 21,289,124 8,441,551 29,730,675 403,307,000 7.4%
(NYSE:BPO) BROOKFIELD OFFICE PROPERTIES INC. 32,255,989 4,198,797 36,454,786 505,221,000 7.2%
(NYSE:TRI) THOMSON REUTERS CORPORATION 41,633,981 14,721,149 56,355,130 820,432,000 6.9%
(NYSE:TAC) TRANSALTA CORPORATION 14,671,193 3,055,839 17,727,032 268,200,000 6.6%
(OTCPK:PWCDF) POWER CORPORATION OF CANADA SV 24,913,803 1,638,953 26,552,756 411,374,000 6.5%
(NYSEMKT:GTE) GRAN TIERRA ENERGY INC. J 16,627,388 755,601 17,382,989 272,193,000 6.4%
(NYSE:ECA) ENCANA CORPORATION 19,568,547 26,663,092 46,231,639 740,200,000 6.2%
(NYSE:VRX) VALEANT PHARMACEUTICALS INTERNATIONAL, INC. 13,792,940 4,467,448 18,260,388 333,890,000 5.5%
(NYSE:PWE) PENN WEST PETROLEUM LTD. 16,547,114 8,028,465 24,575,579 488,100,000 5.0%
(NYSE:POT) POTASH CORPORATION OF SASKATCHEWAN INC. 10,560,180 29,771,258 40,331,438 863,211,000 4.7%
(OTCQX:BDRBF) BOMBARDIER INC. CL 'B' SV 52,650,735 10,909,552 63,560,287 1,443,496,000 4.4%
(NYSE:SLF) SUN LIFE FINANCIAL INC. 23,369,407 2,912,417 26,281,824 607,200,000 4.3%
(OTCQX:COSWF) CANADIAN OIL SANDS LIMITED 17,376,759 3,167,542 20,544,301 484,569,000 4.2%
(NYSE:BCE) BCE INC. 28,544,803 3,980,000 32,524,803 775,893,000 4.2%
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I am amazed Rogers has attracted a 7.2% combined short position, and I hope the shorts are wrong on that one, or BCE and TELUS (NYSE:TU). They've been good contrarian plays for me since the Summer, when Verizon (NYSE:VZ) decided not to enter the Canadian wireless market. Analysts feel the upcoming spectrum auction for the majors will be less costly than expected, although the Harper-led federal government continues to want to force unwanted changes on them.

I should note investors seem to continue to be skeptical of the prospects for Canadian energy producer names such as Encana Corp, MEG Energy and Penn West Petroleum as well as small caps such as Crew Energy and NuVista Energy.

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One caveat to my analysis: derivatives such as convertible issues can play a big part in short positions and some investors will sell the stock and buy the derivative in a tax loss or hedge strategy. This could be the case with New Gold, which has multiple warrant issues outstanding.

Next report ETA January 20.

Disclosure: I am long BCE, RCI, TU. 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.