Short Interest Heats Up in Thermoplastics

Our alerts indicate a sharp rise in the borrow of Spartech Corp (SEH), a thermoplastics company based in Clayton, USA. In the past three weeks the company's % Market Cap on Loan (%MCOL) has risen from 6% to 11% latest. On January 15th Spartech's Director Lloyd E. Campbell announced he had bought 7,294 shares of common stock, potentially because he felt that the shares were undervalued.

However, Utilisation remains fairly low at 17% of the available stock on loan today, but up from 8% earlier this month. This suggests that there is still plenty of stock left to borrow, but whether investors will seize this opportunity is another matter. The company's share price fell from $23 in late July 2007 to $13 on January 10th, although since then it has risen slightly to $14.50 and back down to $14 today. Utilisation for the rest of the North America Materials sector stands at an average of 12%, whereas for the rest of the US Equity RUSSELL 2000 it is 35%, considerably higher than Spartech's (please see the graph of Utilisation for Spartech v the Market). For those wishing to return their shares in Spartech, there are 17.67 Days to Cover.

Other stocks in this sector with a high borrow include chlorovinyls and aromatics producer Georgia Gulf Corp (GGC), with a %MCOL of 30% (over in London at the height of Northern Rock's malaise, the borrow only reached 25%), and Utilisation at 65% with 29.13 Days to Cover, as well as Norbond [TSE:NBD], who have a %MCOL of 27%.

Norbord, who produce wood-based panels, also have a high Utilisation at 66%. The company's share price has dropped from 8.5 CAD to 6 CAD since early December, as you will see from this graph. Norbord has 55.62 Days to Cover.