Weir Share Discussion Threads

[qantas] 17/2/2012 18:47

The phenomenon is known as a short squeeze. Investors rush to buy the stock before it heads higher because they must eventually return the shares they borrowed.


Weir stock is most shorted on FTSE 100

Thursday 16th February 2012, 12:19am
CAPITAL MARKETS
JAMES WATERSON
ENGINEERING firm Weir has become the most shorted stock on the FTSE 100, as investors bet the company's share price will be dented by weak demand for specialist mining equipment.

Information provided by Data Explorers showed that 13.48 per cent of shares are out on loan – double the amount that were shorted only three weeks ago.

Shares in the firm have increased by 4.9 per cent in the same period.

Shale drilling equipment forms a core part of Weir's business and plummeting North American gas prices have raised fears that energy outfits will not maintain current levels of investment.

The firm also faces competition from rivals such as Gardner Denver and new Chinese entrants into the market.

"People will be going after it on the basis that the gas price has collapsed and they will be asking how many new fields will open if the price remains weak," explained Chris Dyett, an analyst at Investec.

"The market is taking a view that you've got weak gas prices and increased competition and both will put pressure on margins. But I suspect Weir will do better than the market thinks."

In the last three months Weir has been on an acquisition spree, buying  valve manufacturer Novatech for $176m, wellhead specialist Seaboard Holdings for $675m and launching £200m bid for Australian firm Ludowici.

The only other FTSE 100 stock to be heavily shorted is Capita, with almost nine per cent of shares on loan, followed by Marks & Spencer with 4.7 per cent.

Average short interest across the index is low at 1.4 per cent.

Rank Company Shares on loan

1. Weir Group 13.48pc
2. Capita 8.88pc
3. M&S 4.74pc
4. Vedanta 3.89pc
5. Serco 3.87pc
6. Admiral 3.61pc
7. Aggreko 3.57pc
8. Glencore 3.46pc
9. Intnl Power 3.44pc
10. IAG 3.32pc

Source: Data Explorers
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[phil140158] 17/2/2012 17:16

Tratante/GI - I think the rise today is due to the FLShmidt (or whatever their name is!) having trumped WEIRs offer. The market doesn't like takeover auctions in my experience. Anyone know how much of the new money is to be used to pay off existing debt?

edit: just read the RNS! That's a lot of money to borrow at 4.16% Just shows the confidence the market has in the company.

[greek islander] 17/2/2012 16:31

Didn't happen with Medusa MML or ABC - share split seemed to stem the surge of the share price

[tratante] 17/2/2012 15:45

"no mention of how they are going to pay for it" ... by raising $1bn byt the looks of it. market seems to like the idea. Time we got above 2200 and carried on upwards. Still think a share split would give these a bit of oomph.

[phil140158] 10/2/2012 10:54

Yet another acquisition proposed by WEIR. Hope they don't get into an expensive auction with FLSmidth. No mention of how they are going to pay for it if successful. I'm looking forward to the announcement due soon, I'm sure it will contain some impressive cashflow now and going forward to pay for all these takeovers!

[tratante] 02/2/2012 23:26

But we are not going to get 2200 now you've said you're going to short it; nobody wants to buy! :-)

[phil140158] 02/2/2012 13:29

patience, tratante! As a strategy, I will review it when we get to 2200. We are expecting news this month after all.

[tratante] 02/2/2012 12:45

See the price is falling away from 2200 before you opended you're short!

[phil140158] 02/2/2012 10:00

Good point, Tratante! Still if it's a hedge there's no money lost even if it doesn't turn out.

[tratante] 02/2/2012 09:16

Don't tell everyone or they'll conspire against you! ;-)

[greek islander] 01/2/2012 16:33

Yes Phil my strategy also. My target also 2200 and then a shorting spreadbet. Might sell some stock (I have a big holding these days) and then sit on the cash back down to 1800-1900 which seems the likeliest of scenarios.

[phil140158] 01/2/2012 15:13

When this gets to 2200 again, which seems only a matter of time. I'm gonna hedge my shares with a short on the spread bet account. This share goes up and down like a yoyo!

[phil140158] 25/1/2012 13:25

Yeh, the prey keeps on turning predator! AS GI says above, the increasing diversity of the companies in the Group, in terms of equipment supply and servicing, must make it more attractive to a potential buyer. I accept that there may be oversupply of natural gas in the US at present, but I am sure demand will rise as major energy users change fuels. Don't forget, addressing the dangers of over dependence on fuel imports is US Government policy and it sure as hell won't change if the Republicans get in!

[tratante] 25/1/2012 12:57

wonder when someone is going to come after weir?

[greek islander] 25/1/2012 08:45

Great news at the perfect time. Further spreads the portfolio.

Weir capitalisation looks to be on the up................

[phil140158] 25/1/2012 07:33

tratante - yeh, seems a great fit. Hope they haven't paid too much. I think your quote from the RNS means that the after tax profit from Novatech (?) will exceed Weir's bank borrowing costs. So I guess they haven't, but it does mean the purchase price will stay on the balance sheet for a considerable time, depending, of course on how much the profit exceeds the costs!

[tratante] 25/1/2012 07:18

nice one

"The acquisition is in line with Weir's acquisition criteria and is expected to be immediately earnings accretive with post tax returns expected to exceed Weir's cost of capital within the first full year of ownership."

[scottishfield] 24/1/2012 15:17

good performance today so far, given the wider mkt.

[phil140158] 21/1/2012 14:42

Surely cheap natural gas must be a boost for the US economy. The markets desperately need some sustained GDP growth somewhere in the developed world.
Downward pressure on the WEIR share price next week, I should think. Loading up the SB account in anticipation of a turnaround before the statement next month.

[apad] 21/1/2012 12:50

Funny to muse over how valued the engineers are now compared with a decade ago, when they were boring and financials were the future.
WEIR is a very good company but that doesn't justify any buying price. A pal bought Renishaw (another excellent engineering company) at £17 not so long ago......
apad

[careful] 21/1/2012 11:55

weir are a great company with a good future.

[greek islander] 20/1/2012 23:45

phil
The wide spread of Weirs activities is very reassuring and is a reason to feel confidence to invest long term as most parts of the whole are working extremely efficiently and profitably the great majority of the company's interests should continue for a long time to bring home the bacon. The PE here is low enough now for it to be still seen as a value stock. Weir has so far well outperformed the market and I see no reason to think it won't continue to do so.

[apad] 20/1/2012 20:22

phil
I am a long term holder and have bought WEIR on 5 occasions, the last being on the August dip. My current yield on WEIR is just over 3%.
What I am pointing out is that there has been a trend since Oct lows of 1400 (that was a time to top up, when the PER was 14, my hindsight tells me) and that this recent drop doesn't look to have broken that trend much.
As I am not a trader and WEIR is a second tier holding for me I might well consider topping up, but not at these prices.
apad