Synthomer (LON: SYNT) shares are down substantially. SYNT shares are also now London’s second most shorted. This is a recent change in positions as well. But the Synthomer shares have been trending down for some time now. So, are those shorts just being late to the party? Or is there something going to happen as well as something that has happened?
As to what actually happens at Synthomer: “Synthomer plc operates as a specialty chemicals company in the United Kingdom and internationally. It operates through five segments: Performance Elastomers, Functional Solutions, Industrial Specialities, Acrylate Monomers, and Adhesive Technologies. The company offers adhesives, including PSA labels, packaging and specialty tapes, saturants, release coatings, wood working, wet glues, hygiene and contact adhesives, packaging and assembly hot melt adhesives;” And so on for the list does continue. We’d not immediately say that’s a goer nor a disaster. It’s how well it’s done that would matter here at first sight.
Synthomer share price from Google Finance
Ah, not all that well then? We’ve looked before at Synthomer: “And that is what Synthomer has just done, as they explain. The value of the company hasn’t - not directly - changed only the number of shares. Therefore the share price should, as a result of this consolidation (a reverse share split to Americans), jump 20x.
As it happens the price hasn’t jumped 2,000%. It has jumped 1,900%. Meaning that it’s 5% off the theoretical price - which we can put another way, as the real price has fallen 5%. “
Well, yes, falling 5% on a share consolidation does show that someone doesn’t like them. And those hedge funds don’t either. The short position is substantially up at the end of last week. Another 1.5% of total issuance up in just a couple of days. To a position of 7.6% being lent out to short position takers.
Now it isn’t true that the shorts are always right. But this seems a reasonably widespread view, across several hedge funds. And a 7.6% aggregate position is large by London standards. At very best we’d have to say that there’s widespread belief that Synthomer is going to get worse, not better.