One phenomenon going on at the moment is the buying of stocks that were going to be stuffed by an ALP victory: i.e.: retail, banks, consumer stocks, property stocks, builders, Mortgagee finance stocks, Private insurance, & private hospital stocks. Plus you could just say many of the “cyclical stocks” forgotten for so long – may now find plenty of renewed interest.

4 observations here include:

  1. Shorts are covering (buying back) their positions
  2. Many (I mean many) instos are / were underweight many of these stocks & some are buying them to get back to at least mkt weight – others will weight for the next selloff & then cover –so any major selloff has an underlying level of buy support in the background (banks especially)
  3. Other Instos are actively buying them as they see that the worst case scenario for many of these from a potential ALP win is now no longer warranted & are thus buying (as we saw in say Ausbil today becoming substantial in JB Hi-Fi)
  4. Quant Funds buying - they simply trade the earnings trends & if brokers start to upgrade EPS estimates for coys that will do well now that ALP did not win - that will add to the buying pressure. We are already seeing it in CSR, Adelaide Brighton Cement, Medibank Private. NIB...

Pre-election - the biggest $ value shorted stocks on an ALP win 

(Click on the charts to expand)

Source Coppo report

Most shorted stocks on an ALP win - by $ short

So in just the last 8 days since the election how are they going ?

Moves in the biggest shorts by $ value" since the election

  • The Top 20 biggest $ shorts here have seen 18 rally & just 2 lower
  • The average rise of these 20 shorts in the last 8 days has been +5.7%
  • vs ASX 200 up +1.2%
  • But also these are "big cap' stocks - so they will find from here that many will now follow the moves in the US mkt. 

28 stocks (not necessarily shorted too much) that should be (most are) rallying on the back of the ALP loss

  • Of these 28 stocks here have seen 26 rally & just 2 lower
  • The average rise of these 28 stocks in the last 8 days has been a whopping +11.3%
  • vs ASX 200 up +1.1%

Source Coppo report

This chart is same as above but simply ranking the biggest movers to smallest - of these 28 stocks - over the last 8 days since the election

Source Coppo report

Get more insights from the insto desk in the Coppo report

This article is based on excerpts from The Coppo Report contributed to Livewire by Richard Coppleson, Director - Institutional Sales and Trading, Bell Potter. You can find out more by clicking here.

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Dan Smith

JB Hi Fi? Giving money to the poorest is now bad for consumer stocks? I'd of thought it was good for them. How many times have you seen Packer at the mall, giving him extra cash aint boosting their profits