Fund managers short sell Nokia in belief its stock will plunge

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.┬áResearch 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.

About Dave Evans

Dave Evans was a long established commentator on both the IT and cellular industries. His last focus was on share price trends within the sector. He passed away in September [2014].
This article was published in Alcatel-Lucent, WP8, mobile news, nokia and tagged , , , , . Bookmark the permalink.

3 Responses to Fund managers short sell Nokia in belief its stock will plunge

  1. Pingback: Hedge Fund News: Jim Rogers, Steve Cohen, Volkswagen AG

  2. John says:

    Of course Nokia stocks will bounce a few more times before its final demise. But the reality remains that it is a triple certified junk status stock with no future. It is a dead stock bouncing.

    What makes it so attractive to shorting is that for the short term, Microsoft will pay large sums of money to try to prop Nokia stocks up while it tries desperately to prevent catastrophic loss with Windows 8.

    This translates to a sure bet for hedge funds and they know it. They smell blood and when the bounce happens, the profit margins will be massive.

    It well be a happy Christmas for many. Its time to put the Finns out of their misery.

  3. Timo Majuri says:

    Sorry John,
    Im also Finn and this time we are making money:)
    Hope that you have not bet appl

    Timppa

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