Green growth stocks have been gaining traction in the sails over the past month. Analysts believe it also boosted short-sold Nel stock significantly.
Despite the red day for Nel stock on Tuesday, the price has received significant support recently – a rally that causes significant paper losses in the largest of the short positions.
Since hitting this year’s low of NOK 12 at the beginning of October, the share has surged 57 per cent to NOK 18.8.
On Tuesday, it traded more than 20 kroner higher, before pulling back a bit.
Nel is the stock with the biggest short positions on Finanstilsynet’s listings, and has been since last spring, but several funds have recently dumped some of their lower price bets.
Investors who have a short position in Neal should be careful
The list now shows that nine international funds hold positions close to 132 million shares, equivalent to about nine percent of all shares in Neil.
The stock rally has pushed many positions significantly into the red, according to Short Nordic. The data service estimates that the total paper losses since the funds last registered over NOK 370 million.
October promotion for green stocks
Shares in industries like hydrogen, solar and wind power rose sharply last year in line with an almost euphoric mood, but they took a hard hit after the new year.
However, October was a month of solid returns.
Robert Ness, chief investment officer at Nordea, estimates that 64 stocks in the “green growth stocks” category have generated an average return of 17 percent since the end of September.
During the same period, the main index on the Oslo Stock Exchange rose by almost four percent.
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Buy Neal, if you dare to believe in the company
Nel produces hydrogen filling stations and the company also manufactures electrolyzers, which use electricity to separate hydrogen from water. The stake has always been popular with young Norwegian and German savers.
– Short coverage that leads to an afternoon
Analyst Thomas Næss at Sparebank 1 Markets points to several possible reasons Nel’s stock has surged more than 40 percent in the past month.
It indicates that green stocks have generally turned positive lately, and indicates that the index, which includes a number of these stocks, has risen sharply.
Neil lost 509 million after the stock merger
– In addition, Neil had a share that was sharply shortened. It has been noted, for example, in the quarterly figures that the short coverage may have led to small stresses that day.
Prior to Hydrogen’s quarterly report in October, short positions increased to just under ten percent.
On the same day, the price rose by 21 percent, many funds Then covered in some situations That profit on lower prices and lose on higher prices.
Nordnet investment economist Mads Johansen says there has been a lot of short-term interest in Nel from more experienced clients this year, but more recently.
– It’s clearly a cover. There is a drop, but there is still a high level of short selling.
According to Johansen, there has been coverage of short positions, especially after Neil presented the quarterly numbers in October.
I think the climate summit is paying attention
The Næss at Sparebank 1 Markets also refers to the Glasgow Climate Summit. The meeting, which brings world leaders together until mid-November, is being described as “the most important since the Paris Agreement” in 2015.
– It was seen during the Paris conference, and now there is a conference in Glasgow that is concerned with green companies. If history repeats itself, there must be a period here with a spike in the green arrows.
Sparebank 1 Markets has a sales recommendation with a target price of NOK 8 on Nel.
Nothing has changed from our view that Nel pricing is too high and there is no company-specific news driving the stakes, adds Næss.
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