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ComfortDelgro's massive short interest.

Thursday, November 30, 2017

Reader says...

Many are concerned that shorting will continue to push the share price down.

What do you say to this?

AK says...
Definitely, ComfortDelgro has been a favorite for short sellers.

There is now a massive amount of short positions in ComfortDelgro.

I see this as a good thing because it has created a buying opportunity.

Short positions have to be covered eventually and, unless ComfortDelgro's fundamentals are rubbish, short covering together with genuine buying interest would send the stock price up.

All else being equal, I would welcome more aggressive shorting as it would let me accumulate at even lower prices.

As I do not believe that ComfortDelgro's fundamentals are rubbish, I believe that the larger the short interest, the stronger the eventual price recovery would be. :)

Related posts:
1. ComfortDelgro's FA.
2. ComfortDelgro's TA.


SGDividends said...

Yes i agree..let it crash and burn temporarily, though i always wonder that these shortsellers have balls of steel or simply lack of emotions given they have to pay financial interest on the amount they short every single day they short it....brave souls

AK71 said...


Traders. ;)

I used to trade more actively and I know many traders do what they do because they want to make more money fast.

Shorting does not require a lot of money to do and it can be very rewarding but because there is very little financial commitment, the temptation to go big can be too much for some.

I have a friend who lost almost $30,000 shorting the market at one time.

And some lost their life savings:

sleepydevil said...

Hi AK,

I have the same thoughts as you.
Ah .. Dear shortist, Please short CDG.
If possible short Singtel and Wilmar too.
Please give me more chance to accumulate them :(

I'd love to see the shortist busy covering their positions back.

AK71 said...

Hi SD,

Seems like we have some similar stuff in our watch lists. :)

I have been accumulating but I wouldn't mind buying more cheaper. ;p

laurence said...

Seems like we have some similar stuff in our watch lists. :)

It's no coincidence. Rather, everyone here jumps in whenever the Oracle reveals a new prophecy.
Myself included. Lol.

AK71 said...

Hi Laurence,


Group think?

I am worried now. -.-"

foolish chameleon said...

how and where do you see the amount of short positions?

AK71 said...

Hi fc,

The short answer is "Google". ;p

An example of what you might find:

AK71 said...

Taxi giant ComfortDelGro announced on Friday (Dec 8) its intention to acquire a 51 per cent stake in the Uber-owned rental fleet business, Lion City Rentals.

ComfortDelGro said the deal, which is subject to regulatory approval, is valued at about $642 million, with a cash consideration of $295 million.

Uber will retain the remaining 49 per cent of the Lion City Rentals, which has a fleet of 14,000 vehicles.

"Upon completion of the transaction, Lion City Rentals will be able to benefit from ComfortDelGro's world-class fleet management and operations, which will be in the interest of drivers and consumers alike," said ComfortDelGro.

ComfortDelGro added that taxi drivers will also be able to receive ride requests on the Uber driver app, thereby increasing their potential earnings and allowing customers the option of booking a ComfortDelGro taxi through the Uber app.


AK71 said...

AK says...
Are the shortists going to be bolder next week or will they scramble to cover their positions? Only Mr. Market has the answer. ;)

Kevin said...
Good deal for Uber to be able to encash a big stake of their car rental subsidiary to ComfortDelgro so as to adhere to their asset light model strategy. Take note that ComfortDelgro did not invest directly in Uber unlike Softbank but paid a hefty S$642m. ;)

AK said...
Yes, I am aware that ComfortDelgro bought into Uber's car rental business (i.e. LCR) and not Uber.

I would not invest in Uber or Grab myself. I am not smart enough to understand why anyone would want to invest in such massive money losing models. So, it is good for me that ComfortDelgro did not invest in Uber.

I know that car rental business is actually a good business and ComfortDelgro is an old hand at fleet management. Realistically, they should be able to do a better job of managing LCR's fleet and reap some benefits.

AK71 said...

Lim Li Chin:
Are u still adding this stock ?

I dun tell u :p

Betta man said...

If it does happens, I wonder what will happen to the dynamics between Grab-Uber-CDG, esp now that uber and CDG are in collaboration.

AK71 said...

Hi betta man,

I invested in ComfortDelgro with the understanding that even if the Singapore taxi business goes kaput, they would still be able to pay the same dividend to shareholders.

I leave the speculation to the speculators. ;p

AK71 said...

"I am not trading ComfortDelgro per se ..."

I just checked my account and saw that I have received a nice 5 figure dividend from ComfortDelgro (and the stock price has appreciated 20% too).

Paying a fairly good price and being paid while waiting is the best (for me). ;p

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