interestrateripoff Posted January 24, 2011 Share Posted January 24, 2011 http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8277221/HMV-the-most-shorted-stock-in-UK.html The average FTSE company has between 2.5pc and 3.5pc of their shares on loan at any time, while HMV currently has 24pc of its shares on loan. Will Duff Gordon, senior analyst at data provider Data Explorers, said HMV has long been a favourite of short sellers betting on the company's troubles. "It has had around 15pc its shares on loan for most of the past four or five years, but it shot up to a quarter after Christmas," Mr Duff Gordon said. Shorting is a way to make gains on a falling share price, often employed by hedge fund managers and other professional investors. HMV Group – which owns bookseller Waterstone's as well as the music retailing chain – has seen its share price drop 55pc over the last three months. Easy money? If you borrow the shares and the company fails does the hedge fund lose? Does this short only work whilst the company is trading? Quote Link to comment Share on other sites More sharing options...
Georgia O'Keeffe Posted January 24, 2011 Share Posted January 24, 2011 http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8277221/HMV-the-most-shorted-stock-in-UK.html Easy money? If you borrow the shares and the company fails does the hedge fund lose? Does this short only work whilst the company is trading? Easy money like VW Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 24, 2011 Share Posted January 24, 2011 If just everyone is shorting HMV share, darling, why are they lending them rather than selling them....or are the city boys buying them from sellers and then shorting them?..or are they already shorted and the city boys need a few to cover? there is no logic to this game. Quote Link to comment Share on other sites More sharing options...
ShedDweller Posted January 24, 2011 Share Posted January 24, 2011 Easy money like VW Sadly I think that's not likely in this case .. (but would be SOOO funny) .. In reply to the origional question .. Yesif the price goes to zero then that's what you pay back .. You just have to return the shares on the day of return. if they are no longer trading then you return nothing .. The problem with VW was that there were so few shares in circulation and all the shorters tried to buy at once when the share price rose .. Quote Link to comment Share on other sites More sharing options...
@contradevian Posted January 24, 2011 Share Posted January 24, 2011 (edited) Easy money like VW Be funny if there is now a takeover bid for the company (though unlikely). Lets start a rumour! Edited January 24, 2011 by Sir John Steed Quote Link to comment Share on other sites More sharing options...
rantnrave Posted January 24, 2011 Share Posted January 24, 2011 Easy money? If you borrow the shares and the company fails does the hedge fund lose? And if the hedge fund loses, are the taxpayers on the line to bail it out? Maybe the govt are on the verge of announcing a rescue package for HMV... Quote Link to comment Share on other sites More sharing options...
exiges Posted January 24, 2011 Share Posted January 24, 2011 Easy money? If it was such a dead cert the share price would be much lower than it is. Quote Link to comment Share on other sites More sharing options...
el_presidente Posted January 24, 2011 Share Posted January 24, 2011 If just everyone is shorting HMV share, darling, why are they lending them rather than selling them....or are the city boys buying them from sellers and then shorting them?..or are they already shorted and the city boys need a few to cover? there is no logic to this game. You don't understand the mechanism. The owner of the share lends the share to the Hedge Fund for a pre-defined period (for a fee). Hedge Fund then sells the share. Price drops through the floor, Hedge Fund buys the share back when the loan period runs out, then returns it to the original owner and banks a big profit. If the price of the share has risen then Hedge Fund must buy back at the higher price and makes a loss. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 24, 2011 Share Posted January 24, 2011 You don't understand the mechanism. The owner of the share lends the share to the Hedge Fund for a pre-defined period (for a fee). Hedge Fund then sells the share. Price drops through the floor, Hedge Fund buys the share back when the loan period runs out, then returns it to the original owner and banks a big profit. If the price of the share has risen then Hedge Fund must buy back at the higher price and makes a loss. yeah but, if the price is going to fall, then the owner should sell. Quote Link to comment Share on other sites More sharing options...
el_presidente Posted January 24, 2011 Share Posted January 24, 2011 yeah but, if the price is going to fall, then the owner should sell. Not if they think it is a good long term investment, they can hold for the long term while making a nice fee for lending and the hedge fund makes profit on the short term volatility. Quote Link to comment Share on other sites More sharing options...
Tonkers Posted January 24, 2011 Share Posted January 24, 2011 (edited) Can't believe someone wouldn't buy HMV, in the right hands it's still a goer. Mind you, I probably thought that about Woolies Edited January 24, 2011 by Tonkers Quote Link to comment Share on other sites More sharing options...
tomwatkins Posted January 24, 2011 Share Posted January 24, 2011 If just everyone is shorting HMV share, darling, why are they lending them rather than selling them....or are the city boys buying them from sellers and then shorting them?..or are they already shorted and the city boys need a few to cover? there is no logic to this game. The company doesn't necessary "lend" them from treasury. Your broker can borrow then from anywhere. Your only obligation is to return them as and when you want. The only time you would have to return them against your will would be if the price started rising and you had the dreaded margin call. Short selling is much more prevalent in the US where rumours (and short sellers) can drive down a stock at will sometimes. For a company trying to raise money (or where bonus's depend on share price) it spells disaster. people get hung up on the "share price" which doesn't actually mean a lot for most companies one it's been floated. A depressed share price, in the short term, means zilch in the real world. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted January 24, 2011 Share Posted January 24, 2011 Not if they think it is a good long term investment, they can hold for the long term while making a nice fee for lending and the hedge fund makes profit on the short term volatility. of course, they could always "naked" short...I gather JPMorgue have done just this with silver. Quote Link to comment Share on other sites More sharing options...
porca misèria Posted January 24, 2011 Share Posted January 24, 2011 Can't believe someone wouldn't buy HMV, in the right hands it's still a goer. With that level of confidence, you should buy shares yourself. Today's share price is factoring in a serious risk of HMV going the way of Woolies. If it survives, shares bought at today's prices will turn a handsome profit as sentiment turns (and as all those short positions get closed). Myself, I'm not going to call "live or die", and I'm not going near the shares. So I'll miss out on both the gains and the losses. Quote Link to comment Share on other sites More sharing options...
exiges Posted January 24, 2011 Share Posted January 24, 2011 (edited) Can't believe someone wouldn't buy HMV, in the right hands it's still a goer. Selling what ? Retail music sales down, retail film sales down. I can't remember the last time I went into a store and bought either. It's downloads or online retail, and if they want to make a go of those they need to act fast and spend big. Edited January 24, 2011 by exiges Quote Link to comment Share on other sites More sharing options...
tomwatkins Posted January 24, 2011 Share Posted January 24, 2011 Selling what ? Retail music sales down, retail film sales down. I can't remember the last time I went into a store and bought either. It's downloads or online retail, and if they want to make a go of those they need to act fast and spend big. Not many people know this but there is an alley in Kingston named after the dog that appeared on the HMV label. Little skinny bugger he was. Quote Link to comment Share on other sites More sharing options...
rantnrave Posted January 24, 2011 Share Posted January 24, 2011 (edited) In its current form, HMV is finished. It sells nothing that cannot be purchased online at a cheaper price and its target audience are the most internet savvy age-group. Music sales are declining, largely due to the pirates being ahead of the curve and setting the market rate (in this case, nothing). HMV also surrendered any attempts at paid for legal music download sites to iTunes and others. Edited January 24, 2011 by rantnrave Quote Link to comment Share on other sites More sharing options...
longtomsilver Posted January 24, 2011 Share Posted January 24, 2011 If just everyone is shorting HMV share, darling, why are they lending them rather than selling them....or are the city boys buying them from sellers and then shorting them?..or are they already shorted and the city boys need a few to cover? there is no logic to this game. The biggest stock lenders are the Pension Funds not the city boys. HMV is toast so we'll just have to stump up more cash for our pension (or not). Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted January 24, 2011 Share Posted January 24, 2011 HMV are a classic case of what's going wrong in the UK. Bosses at FTSE firms averaged 55% increases in remuneration in 2009. They look at each other's remuneration and decide they aren't paid enough, if someone else has increased their remuneration. They can get away with this if they have a dominant position in the market e.g. Tesco. However to fund these massive salary increases they largely have to cut costs, could be jobs or increase their prices. In my experience if I compare HMV prices with somewhere like Amazon they are ridiculously expensive,so I would no longer buy anything from HMV. Some other people must think the same so over time their sales are going to drop. HMV remuneration: Executive Directors Simon Fox 2010 £874,000 2009 £579,000 +51% Neil Bright 2010 £559,000 2009 £349,000 +60% Gerry Johnson 2010 £494,000 2009 £312,000 +58% Non-Executive Director Robert Swannell 2010 £200,000 2009 £50,000 +300% http://www.hmvgroup....report-2010.pdf Now HMV's share price has plunged if another firm has HMV in their Total Shareholder Return group they will be in clover this year. Bosses are given bonuses based on their share performance compared to those of their TSR group. HMV's group is: Carpetright, Halfords, Mothercare, Carphone Warehouse, Home Retail Group, N Brown Group, Debenhams, Kesa Electricals, Next, DSG International, Kingfisher, Topps Tiles, Findel, Marks and Spencer, WH Smith, Game Group Such as Carpets, Mothercare, Tiles, etc don't seem very relevant to HMV? Are they picked because they are a similar size as HMV? I see that several of those in the group have issued profit warnings. As well as being faced with rising prices, our pensions are in shares and too much of the profits are being sucked out in remuneration excesses. TSR Groups should be banned and smaller bonuses should be paid on performance against a group of the top 20 best performing firms. It's a pity we have a FTSE government. Quote Link to comment Share on other sites More sharing options...
headrow Posted January 24, 2011 Share Posted January 24, 2011 I buy loads of DVDs and blue ray from hmv. Free delivery and just as cheap as amazon or play. I hope the shorters get burnt. Quote Link to comment Share on other sites More sharing options...
mfp123 Posted January 24, 2011 Share Posted January 24, 2011 if hmv go under you would have to say that it is evidence that the high street is really dying. virgin has gone,and if hmv goes, there will no longer be any genuine music retailers. perhaps we can do without it, but the same could be said of a whole number of retailers who must be watching over their shoulders. Quote Link to comment Share on other sites More sharing options...
@contradevian Posted January 24, 2011 Share Posted January 24, 2011 I buy loads of DVDs and blue ray from hmv. Free delivery and just as cheap as amazon or play. I hope the shorters get burnt. I would think the online side of HMV will survive or get bought out. Quote Link to comment Share on other sites More sharing options...
Azbola Posted January 24, 2011 Share Posted January 24, 2011 I would think the online side of HMV will survive or get bought out. Agreed - HMV.com is good. Saying that, I just bought a PS3 in-store the other day that was cheaper than anywhere else even on the web. It was quite a pleasant suprise actually. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted January 24, 2011 Share Posted January 24, 2011 I buy loads of DVDs and blue ray from hmv. Free delivery and just as cheap as amazon or play. I hope the shorters get burnt. I fell for that. You had me wondering if the things I had bought recently from Amazon that were cheaper than HMV were one offs. Just checked the DVD charts and the number 1 & 2 Grown Ups and Robin Hood they were both cheaper at Amazon for DVD or Blue Ray. http://uk.movies.yahoo.com/dvd-charts/ Tell us a couple that are cheaper at HMV than Amazon Quote Link to comment Share on other sites More sharing options...
northwestsmith2 Posted January 24, 2011 Share Posted January 24, 2011 Agreed - HMV.com is good. Saying that, I just bought a PS3 in-store the other day that was cheaper than anywhere else even on the web. It was quite a pleasant suprise actually. They need to do some groupon style thing, shift loads of stock at below profit PS3, Wii, Xbox, massive blu-ray offers and slim it down before the liquidators come in then buy back as many shares as possible as low as possible with directors dealing as well. Shorts get pounded day after day with huge swings and calls for more cash. Quote Link to comment Share on other sites More sharing options...
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