It has been a good few months for the world’s major miners, but not everyone believes the recent commodities rally will last.
The surprise surge in prices for iron ore, copper, manganese and oil since January 21 has boosted mining stocks, but also attracted the type of investors who like to bet that shares will go down.
Short positions in Rio Tinto, BHP Billiton, Glencore and Anglo American surged to their highest levels in several years during the first quarter of 2016, suggesting that a growing number of investors believe the improved commodity prices cannot be sustained.
Take Rio for example; the percentage of Rio’s Australian shares sold short in mid February was the highest since Christmas Eve 2012.
While 3 per cent of shares sold short may sound small, its dramatically more than the 0.75 per cent of shares that were sold short just six months ago in September 2015. Short positions in BHP have also tested multi-year highs during the early months of 2016.
The Melbourne-based miner had less than one-half of a percentage point of its shares sold short for most of the past three years, and short positions made up just 0.19 per cent of the share register in March 2015.
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