Betting on a fall: These are the salmon stocks with the largest short positions

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Now those who shorted can cash in.

On Monday, the Oslo Stock Exchange was down 2.4 per-cent. The heaviest fall so far in a year was marked by the recovery of coronavirus troubles and stock market upturns.

However, a correction was not entirely unexpected, many believe prices will fall further, and a good number of investors have positioned themselves for this particular thing.

In the salmon sector, according to the Financial Supervisory Authority of Norway, short positions have been registered in four listed companies. That is in Grieg Seafood, Bakkafrost, Atlantic Sapphire and Mowi.

Betting on decline
Short-selling is a strategy in which an investor occupies a position in an asset, such as a stock, with the intention of profiting from price declines. Such a successful strategy involves borrowing the asset and selling away immediately at the current price, and then buying it back later at a lower price, provided that the price has fallen.

If one measures short positions as a percentage against the total stock market value, Grieg Seafood has the largest share of short-selling. Here, 1.11 per-cent of the company’s shares are sold short.

Put another way, it is this stock most investors relative to stock market value bets will fall in price.

In Grieg, the short positions are divided between Arrowstreet Capital and Citadel Advisors.

Lowest in three years
Looking at Monday’s price drop in isolation, it was those who “shorted” Atlantic Sapphire who got the best payout. The only short position registered here is controlled by JP Morgan Asset Management.

Read more: JP Morgan bets £5.5m on Atlantic Sapphire share price fall

The land-based salmon farmer fell by 2.8 per-cent in value, to NOK 69.50. This is the lowest price level in Atlantic Sapphire since December 2018.

Grieg Seafood followed suit (-2.7 per-cent), ahead of Bakkafrost (-2.3 per-cent) and Mowi, which with its share price fall of moderate 1.5 per-cent performed significantly better than the total index (-2.4 per-cent).

Fall continues
There is little to indicate that the broad market turbulence is over.

On Monday night, all stock indexes in New York, led by the industry-heavy Dow Jones index (-2.5 percent), fell. At the same time, oil prices (-6.2 per cent) are plunging at the same time as the dollar strengthens (to NOK 8.95 against the Norwegian kroner).

The head of allocation and global interest rates at the financial services company Storebrand, Olav Chen, does not believe this is the start of a major fall in prices on the exchanges.

“In practice, the global stock market was at all-time high levels before it started to fall, while there have been few clouds on the horizon. Then it won’t take much for things to turn around. Equity markets are still at very high levels,” Chen pointed out.

“We’re back to the levels from last week. It’s not a crisis,” Chen told E24.