With the price of gold seemingly heading up, up and up, you might think the market would have blessed Yamana Gold Inc.'s (AUY) repeatedly sweetened offer for Meridian Gold Inc. (MDG).
The deal now appears set to go ahead after Yamana's hostile pursuit turned friendly last month, in a bid valued at C$3.7-billion.
Many investors do feel good about the deal; Yamana stock is up 15% since Aug. 31. But not everyone is impressed. Over the same period, the number of shares held in a short position has more than quadrupled, to 38.7-million as of Oct. 15, according to the most recent TSX short report.
It has been the top mover, by far, among TSX-listed stocks and is now the third-most shorted stock in Canada, behind perennial favorites Bombardier and Abitibi-Consolidated (ABY).
Short-sellers, of course, aim to profit by betting that a stock will drop, borrowing shares, selling them and then buying the shares back after they fall in price.
The number of Yamana shares now short amounts to 11% of the float as of June 30. But that float is due to expand considerably with the close of Yamana's cash-and-stock deal for Meridian.
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- Jeff B
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Oct 23 11:27 AM- WestCoastCommentator
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