The Most Heavily Shorted Stocks on the TSX

Short sellers are having their day. But they’re focused on the wrong stock!

Iain Butler

Chief Investment Advisor, Motley Fool Canada Fool since November 2012 Iain Butler is Lead Advisor for Stock Advisor Canada. He is also the Chief Investment Advisor for Motley Fool Canada. Before joining the Fool, Iain was a “buy-side” analyst and through this experience is well-versed in the idiosyncratic ways of the Canadian market. His investing interests are centred on scouring the market for interesting businesses that trade at reasonable prices and offer an appealing risk/reward relationship. Since joining the Fool in 2012, Iain dedicates each day to spreading Foolishness throughout this great country!

Published June 20, 2013 4:14 pm EDT

Even though it’s doom and gloom across the board for most investors today, some of us have to be making money in this Fed/China inspired meltdown. Right? It’s not me, that’s for sure.

There are those that walk amongst us that are brave enough to sell stocks short, allowing them to profit when the market does what it’s doing today.

Unfortunately for them however, when we turn to the TSX’s published list of top short positions, we find sitting perched atop the pile one of the only stocks to be flashing green today. Manulife Financial (TSX: MFC) is numero uno with an outstanding short interest of 82 million shares, a near 19 million increase from the end of May. Oops!

As we had indicated in a recent edition of Take Stock, Manulife and its life co peers are poised to benefit in a rising rate environment, which is part of the reason for today’s decline. Somebody needs to re-read the playbook!

The rest of the list checks out pretty nicely however. Mining companies Lundin (TSX: LUN), New Gold (TSX: NGD), and Osisko (TSX: OSK) fall in line after Manulife. Each has an outstanding short interest as a % of shares outstanding of 12.2%, 10.9%, and 9.6% respectively. And all are taking a beating today. Only Lundin however has seen its outstanding short interest increase from the end of May.

Not too far below these mining companies on the list however rests another interesting entry. The iShares S&P/TSX 60 Index Fund (TSX: XIU) currently has an outstanding short interest of 39 million shares, up 7.5 million from the end of May. A wise move given our market’s exposure to resources.

If you’d like to get tuned in as to why anybody would want to short the TSX 60, click here to download our special FREE report “5 Stocks to Replace Your Canadian Index Fund”.

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Fool contributor Iain Butler does not own any of the companies mentioned in this report. The Motley Fool has no position in any stocks mentioned at this time