The Globe and Mail reports in its Friday edition that S3 Partners research head Ihor Dusaniwsky recently compiled a table of Canadian
stocks showing large increases and
decreases in short positions. The Globe's guest columnist Larry MacDonald writes that Mr. Dusaniwsky follows changes in the dollar value
of shares shorted. Enbridge had the largest
increase for both the weekly
and monthly periods up to Oct.
17 (the value of its short position
is now four times higher than
what it was 18 months ago).
Enbridge's dividend is
regularly increased and analysts
are positive. So the
short-selling is sounding a discordant
note, despite the impending
merger with Spectra
Energy. One problem, as
Sui Generis Canada manager Daniel Lloyd
has noted: Valuation, like other
yield plays, has become rich
from investors chasing yield in a
low interest-rate environment.
This puts the stock at risk,
especially if interest rates begin
to trend up and compete with
dividend stocks for investors'
capital. There is also a huge debt
load with a carrying cost that
could escalate substantially. As well, pipelines face
lower shipment volumes as conventional
energy producers
retrench in a world of lower
prices.
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