Alphawave IP Group (known as Alphawave Semi) has been targeted by short-sellers after revising its earnings expectations downwards. The company, which provides high-speed connectivity solutions for data centres, artificial intelligence and 5G wireless infrastructure, revealed in mid-April that its 2023 earnings would fall below its original forecasts due to its “accelerated transition away from China”.
The company warned that its investments in research and development would have a negative impact on profits and that revenues from “long-term contracts in advanced nodes” would be lower than expected.
Alphawave Semi published its annual report a week later, on 23 April 2024, with revenues of $321.7m for 2023. This represented a 74% increase compared to 2022 but fell below the company’s original outlook of $340m to $360m.
JPMorgan Asset Management disclosed a short position in Alphawave Semi last month amounting to 1.4% of the latter’s share capital. Marshall Wace, GLG Partners and Kuvari Partners have placed smaller bets against Alphawave Semi, according to the Financial Conduct Authority.
These bets have catapulted Alphawave Semi into the 10 most shorted UK-listed companies, ranked by the percentage of their share capital in the hands of short sellers.
Alphawave Semi listed on the London Stock Exchange three years ago and its share price peaked at £4.52 on 6 August 2021. It fell to £1.80 by 5 November 2021 and has been fairly range-bound since then. It was trading at £1.36 at the time of writing on 3 June 2024.
Short-sellers have also increased their bets against Ocado, which was the second most-shorted stock last month and risks being ejected from the FTSE 100 in its imminent reshuffle.
Dan Coatsworth, investment analyst at AJ Bell, described Ocado as “one of the most Marmite names on the UK stock market”.
“Investors either love or hate the quasi grocery/technology group and some even change their mind on a daily or weekly basis,” he said.
“There is always a ‘will it, won’t it’ element in trying to second guess what Ocado is doing strategically. On paper, the business model is focused on winning more grocery clients to power its online shopping warehouses, while also trying to improve the performance of a joint venture with Marks & Spencer. In reality, progress has been lumpier than gravy in a school canteen,” he concluded.
Energy facilities company Petrofac remains the UK’s most-shorted stock, as the table below shows.
Source: Financial Conduct Authority