Short Selling

Short Selling Report: Petropavlovsk PLC (POG:LN)

Short Selling Report: Petropavlovsk PLC (POG:LN)
Petropavlovsk PLC
POG:LN
12 months:
-3%
Activity:
Bearish
Pattern:
High short interest
News:
Ex-CEO arrested
Petropavlovsk PLC
POG:LN
12 months:
-3%
Activity:
Bearish
Pattern:
High short interest
News:
Ex-CEO arrested

Short selling data can help active investors avoid large losses. Short sellers tend to be sophisticated, high-conviction traders. If they’re shorting a stock, there’s usually a good reason they are doing so.

In this report, we are going to discuss the short selling data on Petropavlovsk (POG:LN). Petropavlovsk is a UK gold mining company that has operations in Russia. The company, which operates several major mines, is one of Russia’s largest gold mining companies in terms of both production and resources. It is listed on the London Stock Exchange and currently has a market capitalization of £936 million.

Petropavlovsk: Short Selling Data

The short selling data on Petropavlovsk reveals that the stock’s short interest has risen significantly this year. At the start of 2021, 220,419,953 POG shares were being shorted, which represented short interest of 5.57%. However, today, the total number of shares being shorted is 12% higher at 246,933,663 shares, which represents short interest of 6.24%. As a result of this increase in short interest, the stock is now the fifth-most shorted stock on the London Stock Exchange, according to data from the UK’s Financial Conduct Authority (FCA).

We can see that there are currently three active managers with short interest above 0.5%. One of these is Citadel Europe LLP, which is one of the major players in the short selling market. It has held a short position of 0.96% since August 2020.



It’s worth noting that the rise in short interest has coincided with a decline in the company’s share price. Petropavlovsk shares started the year trading at £0.3250. Today, however, they are trading at around £0.2430.

Why Are Short Sellers Targeting Petropavlovsk?

As for why short sellers are targeting Petropavlovsk, it is most likely due to the fact that late last year, Pavel Maslovskiy, the co-founder and former CEO of the company was put under arrest by a Moscow court for embezzlement charges. Maslovskiy is suspected of misappropriating about 95 million rubles ($1.3 million) from the company’s Pokrovsky mine in 2018.

Moreover, the annual report published by Petropavlovsk during June 2021 stated that the company's forensic auditors KPMG have "identified a number of potentially concerning arrangements, with a value of at least US$134 million, involving undisclosed related parties and likely conflicts of interest. Other areas also remain under investigation, including significant historic transactions.”

Maslovskiy was recently ousted when Petropavlovsk’s largest shareholder, UGC, a rival Russian gold miner controlled by billionaire Konstantin Strukov, voted against the re-election of seven board members.

The high level of short interest could also be related to the fact that last year, Petropavlovsk’s auditor resigned over governance concerns.

Whatever the reason short sellers are targeting Petropavlovsk, we think caution is warranted towards the stock right now. The high level of short interest indicates that short sellers expect the stock to fall from here.

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