Shorters eye up watches
As Apple gets ready to enter the watch market, there has been increasing short interest in its potential competitors over the last few months.
Swatch Group has seen shorts quadruple since the start of the year and both Movado and Fossil have seen shorts surge.
“While early technological specs seem to indicate that users of the Apple watch would still need to compromise on such things as battery life and connectivity, it still provides a credible competitor to several aspects of the watch market; mainly mid-tier and sports products,” said Andrew Laird, securities finance analyst at Markit.
“As a result, many of the established watch industry participants now see high short interest in the wake of Apple’s latest announcement.”
Swatch, the Swiss timepiece conglomerate with a heavy luxury tilt has seen shorts build up over the last few months and now sees the highest proportion of its shares out on loan in over a year.
While a proportion of the increased shorting activity was probably driven by the speculation of Apple’s entry into the watch market, investors are also likely to be reacting to the weakening Asian market.
Fossil Group saw the largest surge in demand to borrow with shorts jumping from 0.5% to 4% of shares outstanding in the last few weeks.
Movado, which offers many fashion brand watches in its product offering, has also seen a jump in short interest in the last few weeks. This also coincides with another weak earnings announcement which has sent the firm’s shares down by 22% in the last month.
“Shorts have become more active in the watch space in the last few months, while this does not seem to be entirely driven by the prospects of Apple entering the industry; a new deep pocketed competitor has the prospect of disrupting the current watch industry at a time when a weakening Chinese market has seen the industry struggle for growth,” added Laird.
The two listed Japanese watchmakers have not seen much of a jump in short interest with both Citizen and Seiko seeing flat demand to borrow in the last few weeks.
Swatch Group has seen shorts quadruple since the start of the year and both Movado and Fossil have seen shorts surge.
“While early technological specs seem to indicate that users of the Apple watch would still need to compromise on such things as battery life and connectivity, it still provides a credible competitor to several aspects of the watch market; mainly mid-tier and sports products,” said Andrew Laird, securities finance analyst at Markit.
“As a result, many of the established watch industry participants now see high short interest in the wake of Apple’s latest announcement.”
Swatch, the Swiss timepiece conglomerate with a heavy luxury tilt has seen shorts build up over the last few months and now sees the highest proportion of its shares out on loan in over a year.
While a proportion of the increased shorting activity was probably driven by the speculation of Apple’s entry into the watch market, investors are also likely to be reacting to the weakening Asian market.
Fossil Group saw the largest surge in demand to borrow with shorts jumping from 0.5% to 4% of shares outstanding in the last few weeks.
Movado, which offers many fashion brand watches in its product offering, has also seen a jump in short interest in the last few weeks. This also coincides with another weak earnings announcement which has sent the firm’s shares down by 22% in the last month.
“Shorts have become more active in the watch space in the last few months, while this does not seem to be entirely driven by the prospects of Apple entering the industry; a new deep pocketed competitor has the prospect of disrupting the current watch industry at a time when a weakening Chinese market has seen the industry struggle for growth,” added Laird.
The two listed Japanese watchmakers have not seen much of a jump in short interest with both Citizen and Seiko seeing flat demand to borrow in the last few weeks.
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