Investors betting on failure of its WP8 strategy
Finnish manufacturer Nokia is among European tech firms being targeted by hedge fund managers who are selling its stock short in anticipation its price will dive. Research conducted by Markit, which provides securities lending data, reveals 6.7 per cent of such shares are on “loan” to hedge fund managers who believe the tide is turning against Nokia and other big technology names.It has led to a surge in short selling of the stock which is temporarily plucked from the portfolios of wealthy clients, sold and then re-purchased if and when the price plummets.
Nokia alone has seen an 8.1 per cent rise in the number of shorts against it, rising to 18.8 per cent of its stocks out on loan, as investors bet against the success of its forthcoming Lumia 920 phone and Windows 8 reliance.
“Nokia’s stock is a ripe short-squeeze candidate, with almost all the stock that can be borrowed being on loan,” commented Markit director, Alex Brog.
Telecom equipment makers such as Aixtron and Alcatel-Lucent are also being targeted, as are chip makers whose fortunes are largely dictated by consumer spending and business confidence – both of which are flat.
However Markit warns that the hedge fund managers could get their fingers burnt in the case of Nokia.
Negative sentiment towards the troubled phone maker has reached such heights, it suggests, that short-selling bets could backfire and spark a “short-squeeze”, sending the stock sharply higher.