Varta shares become the game ball of hedge funds

Dusseldorf The German Leading index Dax closed with a slight plus on Thursday. It closed 0.2 percent higher at 10,300 points. By early afternoon, the Dax had consistently posted a plus of around one percent. Then, however, he had turned negative in the meantime and then only recovered slightly.

In the afternoon, new, weak economic data was presented in Washington: Initial jobless claims last week totaled 5.245 million, a figure of 5.105 million was expected. The US stock exchanges were then initially turned negative. Recently, however, only the Dow Jones was slightly below the previous day’s level.

“The labor market in the USA is particularly hard hit by the pandemic and the associated restrictions on public life,” said the analysts at Landesbank Helaba. A total of approximately 22 million people have applied for financial support in the past four weeks.

The Philadelphia Region sentiment barometer has also weakened significantly and is even well below expectations. The index had already deteriorated significantly in March and is now at the lowest level since the mid-1980s. According to the Helaba analysts, economic worries are becoming greater as a result of the data release.

The Dax had reversed yesterday after a five-day recovery and went out of business with a minus of 3.9 percent at 10,279 points. According to chart technology, the Dax achieved a spot landing: from 10,279 points, the index started a rally in December 2018, which continued until a record high in February 2020.

A particularly interesting share is that of Varta, because the game of hedge funds with the title apparently continues. Today, Thursday, the paper rose by 6.7 percent to EUR 72.75, leading the list of winners in the MDax by far. This is no surprise, even if the share certificate at the close of trading was only 3.8 percent up: Five hedge funds are now under pressure to buy around 2.6 million shares. They may have started this Thursday.

Because the funds sold the Varta share short, as it is said in technical terms. So you’re betting on falling prices on paper. To this end, they have borrowed and sold 2.6 million Varta shareholders such as investment funds. But in order to return these shares, you have to buy them again beforehand. Of course, if possible at a lower rate.

With an average trading volume of around 272,000 shares per day in the past month, this buyback has to be carefully dosed so that the Varta price does not rise rapidly and puts pressure on the hedge funds. Because they want to buy back the papers cheaply.

Incidentally, this also explains the drop in yesterday’s Varta share of just under nine percent on Wednesday: the hedge fund Tiger Global increased its short sale rate from 1.06 percent on Tuesday to 1.16 percent on Wednesday.

With 40,421 million freely tradable shares, he borrowed an additional 40,421 papers and sold them on the day. With a total trading volume of 320,000 units on Wednesday, this sale is likely to have influenced price development.

With such figures, an analyst should say: only the fundamental values ​​are important.

According to the investor survey conducted by the Frankfurt Stock Exchange, the Dax is likely to buy again below 10,000 pointssays Joachim Goldberg after evaluating the survey on Wednesday evening. According to this survey, the mood has dropped significantly despite the rising prices, the Sentiment Index of the Frankfurt Stock Exchange has even dropped to the lowest level since the beginning of the 2002 survey.

To put it simply, negative sentiment is – according to sentiment analysis – a contraindicator because many investors have already sold.

The behavioral economist is also expecting further demand if this recovery rally should continue. “Above all beyond the 11,000 mark” there could be a sudden, rapid rise in prices (“short squeeze”) because investors would then have to buy more. But the Dax is still a long way from this point.

Look at the individual values

Zalando: The coronavirus pandemic is affecting Europe’s largest online fashion retailer. As a result of the weaker growth wants Zalando save now in the current year. Marketing and general costs are to be reduced by 250 million euros and investments by 100 million euros. Nevertheless, the company listed in the MDax average index wants to stick to its original plans and expand its luxury segment and also include second-hand goods in its range. Investors are happy about this news, the stock gained 6.2 percent on Thursday.

Easyjet: The company sees itself prepared for a longer standstill of its fleet and is pleased with its shareholders. At the start of trading, the paper gained more than ten percent and was the frontrunner on the London Stock Exchange. Most recently, however, the paper was down 2.5 percent. The low-cost airline expects to be able to survive a longer break. In addition, the bookings for winter are better than last year.

Look at other asset classes

The gold price put in its upward trend a little breather, but was recently back up 0.4 percent at $ 1,723 per troy ounce.

A side note: Because of the corona virus, the US Mint has to temporarily close its plant in New York. According to the Commerzbank– Commodity analysts are short of gold coins in particular and are distorting the gold market in the United States.

According to a coin dealer, the premiums for gold coins are already five to ten percent above the spot price of gold. After a long dry spell, the Americans bought as many gold coins in March as they did last in November 2016 at 151.5 thousand ounces, according to data from the US Mint. Demand continues: in April it was 56.5 thousand ounces again.

The bond market clearly shows: The decisions of the finance ministers last Thursday to deal with the corona crisis have no effect. The government in Rome will not apply for an ESM package. Accordingly, yields on Italian and other government bonds have risen significantly again.

Although the yield on a ten-year government bond falls to 1.805 percent, the market should soon test the reaction of the European Central Bank: when will it react to this with higher bond purchases? The yield spread (spread) between a German and an Italian government bond has increased to 240 basis points in the past few days, but is currently only at 228 basis points.

Oil prices recovered slightly on Thursday from the significant losses of the previous days. In the afternoon, a barrel (159 liters) of North Sea Brent cost $ 27.63. The price of a barrel of American WTI was little changed at $ 19.97. In the meantime, the price of US oil had dropped to $ 19.20, the lowest level since 2002.

“The oil price is at a low point, but the market could pick up again in June”

The oversupply of crude oil continues in the meantime, and the cut in production agreed by leading oil nations does not come into force until May. As the U.S. Department of Energy announced on Wednesday, stocks in the U.S. have grown significantly more than expected last week. According to the Ministry of Energy, inventories rose by 19.2 million to 503.6 million barrels. This is the strongest increase ever measured.

At the same time however, the Organization of Petroleum Exporting Countries (Opec) predicted a drastic drop in oil consumption due to the corona crisis. As can be seen from the monthly report published in Vienna on Thursday, the oil cartel is expecting the weakest demand for Opec oil in the second quarter in around 30 years.

Dealers still expect no short-term relaxation on the oil market. “In the short term, the market will remain flooded,” said Torbjorn Tornqvist, managing director of the oil dealer Gunvor Group.

What the chart technique says

According to technical analysis, the leading German index is now testing the important key support below the 10,300 point zone. On the one hand, the striking low of December 2018 with 10,279 points is important, the starting point for the rally, which lasted until the record high in February 2020. Just below that there are so-called price gaps for which there were no quotes this year. The last gap would be closed at a Dax level of 10,097 points.

The recent recovery rally led the Dax from 8255 points in mid-March to a new five-week high last Tuesday at 10,820 points. This rally remains intact as long as the stock market barometer remains above 9235 points.

If this upward trend remains intact, the next targets would be 11,030 and then 11,266 points, the August 2019 interim low.

Here is the page with the DAX course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database.

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Dax closes almost four percent in the red

Dusseldorf The German Leading index Dax ended trading on Wednesday with a minus of 3.9 percent at 10,279 points. After an increase of 14 percent in just five trading days on Wednesday, the German stock market started to reverse again.

Sold today Wednesday apparently many foreign investors bought German shares. Because the Dax increased its minus significantly from midday trading to the opening of the US stock exchange, at the same time the euro slipped to $ 1.0918 during this period. Almost all Dax values ​​went out of the market with a minus.

Weak economic data in the US unsettled investors and also weighed on Wall Street prices. The Dow Jones already opened 2.2 percent in the red and then fell even further.

Investors were in the mood for news that the US industry cut production more in March than it had in 1946. The companies produced 6.3 percent less goods than in the previous month, as the central bank (Fed) announced in Washington on Wednesday. Overall production – to which utilities and mining also contribute – shrank by 5.4 percent.

US retailers’ sales also fell 8.7 percent in March from the previous month due to the corona crisis, the Department of Commerce said in Washington on Wednesday.

And last but not least, the US banks are suffering from the corona crisis: Due to provisions in the billions due to bad loans, the profits of Goldman Sachs, Bank of America and Citigroup almost halved.

In Germany, in addition to the weak US data, speculation that the German government was not in such a hurry to relax contact restrictions in the virus crisis caused the Dax to slide ever deeper into the red. And after having won almost 30 percent since the corona crash low in mid-March.

Just yesterday, the prices of some stocks had made investors forget that the world was in the middle of an economic crisis. So the course of the Tesla-Share more than doubled since mid-March. The Dax 30 values ​​could be about Wirecard have increased by around 35 percent in the past four weeks.

“The current crisis is like an accelerator of trends that have worked before,” says Jochen Stanzl from online broker CMC Markets. It was used as an excuse and pretext by companies that had previously had problems to carry out restructuring that was long overdue. And it is the reason for the crisis winners to expand even faster.

However, there are many crisis losers. For example, the engine manufacturer MTU, which was down 6.9 percent on Wednesday at the Frankfurt trading venue at the close of the stock exchange. The growing number of canceled orders from the US rival Boeing does too airbus– investors nervous. The shares of the European aircraft manufacturer lost around 8.7 percent.

After all: The new infections with the Covid 19 virus appear to be stabilizing or decrease. That is why there is talk in many, but not all, countries of easing contact barriers. Governments and central banks are throwing huge support packages on the market and pledging to do more when in doubt. So are you okay?

“I’m afraid the real reality check could still come,” says CommerzbankForeign exchange analyst Antje Praefcke. The market had put up with the previous “shockers” like the US labor market figures relatively well. So far, however, they would not have reflected the full extent of the effects of the “century recession”.

Many questions would remain unanswered: Are the production and supply chains really recovering quickly? Does consumer behavior change permanently? What about the recovery of the economy? “The big end could still come and give the market another cold shower,” says the analyst.

Investor sentiment also expects a sell-off on the German market, even if this may no longer push the Dax towards the 8200 point mark. “Investors should not run after the rising prices,” advises Stephan Heibel after evaluating the Handelsblatt survey Dax-Sentiment.

Meanwhile, there are increasing voices that the stock market lows from the end of March will be tested again. Should such a correction set in, there is a risk of a loss of 20 percent or more, depending on the market.

The problem with such forecasts: If a unanimous opinion has formed, it usually turns out differently. As a result, a full-fledged bear market is threatened with new lows, or the bear market is already behind us.

Look at the individual values

Varta: The battery manufacturer’s share, which traded almost nine percent lower on Wednesday at the close of trading, is moving into the focus of hedge funds that are betting on falling prices. The five participating funds have increased this speculation to 6.31 percent of all freely tradable shares in the past few days – a comparatively high ratio.

Such a short sale, as it is called in the technical language, consists of two different trading activities. For one thing, a hedge fund borrows from you Varta-Shareholder (for example, a mutual fund) share certificates and sells the papers.

Apparently that has happened in the past. On March 31 and April 8, for example, the Varta price fell in the meantime by a double-digit percentage – and this with a high trading volume. Last month, the average volume was around 272,000 pieces per day. On March 31, however, almost 750,000 Varta papers were traded, and on April 8, more than 484,000 pieces.

On April 9, the hedge fund Maplelane Capital reported that it had reached a short sale rate of 0.5 percent. Quotas below 0.5 percent do not have to be reported to the Bafin financial regulator.

But now the second trading activity is pending. The hedge funds must buy back the shares as cheaply as possible and return them to the lender. Not an easy task, as a small calculation example shows.

Because a short sale rate of 6.31 percent means: 2.55 million shares have to be bought back. With an average daily volume of 272,000 shares, this buy-back must be carefully dosed so that the Varta price does not rise rapidly and puts the hedge funds under pressure. Because they want to buy back cheaply.

Adidas: The addition of a billion dollar government loan does not help the share either. Although the paper had been 1.3 percent higher in pre-exchange trading, the shares dropped 4.7 percent from regular trading. The sporting goods group raised three billion euros from the development bank and major banks. Two-thirds of the remuneration of the Board of Management is deleted, and the dividend is also canceled.

Adidas suffers from the fact that practically all of its own stores in the western world have been closed for four weeks – including those of independent sports retailers. The stock had lost almost 50 percent since mid-February, but has risen by around 25 percent in the course of the stock market recovery in four weeks.

Fraport: The travel restrictions to curb the corona pandemic have at the Frankfurt airport operator Fraport led to a slump in business. The number of passengers fell by 62 percent to 2.1 million in March alone. The development continued in April: In the first two weeks, the passenger volume fell by over 95 percent. At the close of trading on Wednesday, the paper was down 4.8 percent.

Kuka: The Augsburg-based supplier has a large order for 5,000 robots for the car manufacturer BMW pulled ashore. This news initially caused the share to rise by 1.4 percent, but by the close of the stock market it had slipped significantly again and was 3.9 percent weaker from trading.

The systems and other technologies for the automation of production are to be delivered to BMW plants worldwide in the next few years, where they will be used primarily in body construction Kuka With. The two groups did not comment on the order value and the delivery period.

Oil prices are slipping

Brent oil from the North Sea is heading for its 18-year low from late March ($ 21.65): It fell 6.6 percent to $ 27.62 a barrel. The prices had already dropped significantly yesterday.

After all, according to the International Energy Agency (IEA), global oil demand will be weaker in April than it has been in a quarter of a century. It will drop by an average of 29 million barrels (159 liters each) a day, the IEA predicted in its monthly report on Wednesday.

“April could be the worst month – it could go down in history as black April,” said IEA chief Fatih Birol. A drop in demand of 9.3 million barrels a day is forecast for 2020. Such a sharp drop in demand cannot be compensated for by a reduction in the oil supply, the organization emphasized.

What the chart technique says

Even if the chart technique gives the Dax potential up to 11,030 points: In the short term, the indicators signal falling prices. Because the leading German index is considered overbought after an increase of 14 percent in the last five trading days before Wednesday alone, so it rose too quickly too quickly.

“At least in the short term, the downward risk seems to be higher than the upward chance, especially since the steep, almost four-month upward trend should not last too long,” say the chart technicians at Düsseldorfer Bank HSBC.

The structural picture of the individual Dax 30 values ​​has not yet brightened. All shares are listed below the 200-day line, which signals the long-term trend and underscores the still dominating, overall downward trend.

“When planning wealth, the rule is: never get out completely!”

Here is the page with the DAX course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database.

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Dax slips significantly – shortsellers target Varta stock

Dax curve

View of the Dax curve in the Frankfurt trading hall.


(Photo: dpa)

Dusseldorf The German stock market continues to widen its losses in the course of trading: listed in the afternoon the Dax 3.4 percent minus 10,331 points.

On Tuesday, the index rose 1.3 percent to 10,696 points after a four-hour technical downtime in Xetra trading. At the same time, the leading index reached a new monthly high of 10,820.

Sell ​​today apparently many foreign investors bought German shares. Because the Dax has increased its minus significantly since noon until the opening of the US stock exchange, at the same time the euro slipped significantly during this period by one percent to $ 1.0874.

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Dax survives a slide and closes 1.2 percent in positive territory

Dusseldorf The Dax continued its slight upward trend from the previous day on Tuesday: the leading German index closed 1.2 percent up at 9936 points. In the morning, the leading German index had even reached 10,096 points, but was unable to hold the five-digit number.

In the meantime, however, the Dax had slipped almost 400 points and was trading in negative territory before working its way up again in the afternoon with the opening of Wall Street. Probably had foreign investors triggered the price slide. The euro also fell against the dollar and subsequently recovered to the same extent as the Dax.

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Red pencil for investments – How companies keep their money together

Düsseldorf, Stuttgart In the past year, Germany’s third largest automotive supplier ZF has invested more than ever before: 1.9 billion euros went into new property, plant and equipment in 2019 alone. Now every cent is turned over at the Friedrichshafen company in the middle of the corona crisis.

“Of course we are currently stopping investments, we currently have a full freeze on everything we do,” says ZF boss Wolf-Hennig Scheider. After all, he feared that the production stop outside of China could continue until May.

Germany’s companies keep their money together: liquidity management is currently a priority. And that is where many companies start investing, as a study by the audit and consulting firm PwC shows.

PwC asked finance directors of companies from Dax, MDax and SDax how they react to the economic downturn: 64 percent want to postpone investments or cancel them entirely. This intervention came first in the survey – after cost reductions and the creation of a completely new financial plan.

Renovation experts confirm the trend. “Manufacturing industries primarily have two balance sheet levers to secure liquidity. In addition to stopping shopping and selling raw materials, an immediate review of upcoming and selected ongoing investments is particularly suitable, ”says Ralf Moldenhauer, Managing Director and restructuring expert at the Boston Consulting Group.

Many companies are now making use of this: Sixt, Hugo Boss and Hapag-Lloyd postpone or review these expenses. At Lufthansa investments of three billion euros originally intended have largely been canceled.

However, dealing with investments is a sensitive issue: After all, companies have to prepare for the future and for the restart of the economy after the crisis – even if only a few might think of it.

Protect digital projects

In the current phase, companies should differentiate between “good costs” that need to be protected and “bad costs” that should be reduced, recommends Ulrich Störk, spokesman for the management of PwC Germany. “It is not easy, but there are investments that need to be made even more in this phase.”

The PwC study shows where companies are currently starting: In the first place, planned expansion investments or new buildings are canceled. This is planned by 72 percent of the companies surveyed. 67 percent put the planned expansion of business processes on hold, for example in sales. 61 percent start with HR work – in other words, everything that concerns new hires and external training.

At the same time, however, it can be seen that, despite the difficult situation, many companies are sticking to future-oriented investments and transformation projects. At the automotive supplier ZF, for example, development projects for new models are being “continued unabated”, as CEO Scheider emphasizes, for example with new electric car models that are in the pipeline under the pressure of stricter climate protection regulations.

Volkswagen does not want to be left behind on important issues such as strengthening e-mobility and software development. Other investment projects would be questioned. “We postpone projects that are not critical to success,” says Volkswagen CEO Herbert Diess.

Due to the intensification of the Syrian-Turkish conflict, VW had already suspended the decision to build a new plant in Turkey in 2019. Due to the corona crisis, this project is moving even further into the background, says a group insider.

In the PwC survey, only 28 percent of CFOs said they wanted to cut back on digital transformation projects – three quarters of companies don’t want to stop this fundamental change unceremoniously. In research and development, too, only 39 percent are planning to cut jobs.

“I can only warn against losing sight of important future issues such as sustainability and digitalization out of fear and with a focus solely on costs,” says PwC Germany chief Störk. The audit firm made a conscious decision to continue investing in its digital transformation, especially in the workforce.

McDonald’s is outsourcing

This is difficult for companies that are in need of existence and have no liquidity cushion. Experts recommend that you first get a comprehensive picture and list all expected income and expenses over the next 13 weeks. This is difficult for many managers because securing cash has not been on the agenda in recent boom years.

Building on this, all levers for securing liquidity should be set in motion. Depending on the industry, they are placed quite differently, as BCG expert Moldenhauer emphasizes. For example, traders should first of all try to collect due payments and lure them with special premiums for quick payment. They could also agree longer payment terms with their strategically important suppliers and new minimum purchase quantities.

Moldenhauer advises that service providers should also opt for special premiums when the invoice is settled quickly. However, the greatest leverage is achieved through a hiring freeze, short-time work or forced vacation.

Some companies also break taboos: that’s what the battery manufacturer wants Varta keep the dividend in order not to have to cancel the planned investments. The company plans to significantly expand the production of lithium-ion batteries.

In addition to cost pressures, creativity is required on the revenue side, as Moldenhauer emphasizes. The fact that car manufacturers are now producing ventilators is not just an act of help, it also generates sales.

It is also smart to outsource costs, so to speak: McDonald’s does this through a cooperation with Aldi. Because restaurants are closed, the burger roast “lends” its employees to the Aldi branches, where personnel are urgently needed. At the discounter, McDonald’s people are paid at the usual conditions in the trade.

More: How well are Germany’s companies prepared for the crisis?

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