Updated Again July 28, 2017 - BBD Q2 Back in the Black! - Bombardier: Over 100 Millions Shares Short - The Real Meaning!
Financial 2nd Quarter Results Publication is July 28
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Updated July 27, 2017
**Updated July 28, 2018 - Bombardier Reported Surprise Profit
July 28 (Reuters) - Canada's Bombardier Inc posted a surprise quarterly profit on Friday and said it expected 2017 earnings before interest and taxes (EBIT) to be at the higher end of its forecast.The Montreal-based plane and train manufacturer had forecast EBIT before special items to be in the range of $580 million-$630 million. Adjusted net income, which excludes some items, was $39 million or 2 cents per share, in the second quarter ended June 30, compared with a loss of $83 million or 6 cents per share, a year earlier. Analysts on average had expected Bombardier to post a loss of 1 cent per share, according to Thomson Reuters
- Bombardier: BBD.B Over 100 Millions Shares Short, But BBD.A is the Total Reverse with a Short Position that has not Been So Low Since Dec 2013 - Who is Right, .A or .B Traders?
As you know, tomorrow early morning will be the publication of the 2nd quarter 2017 financial results of Bombardier Inc.
Speculation is going on, will the
results be in line with the average expectations of financial analysts following the company?
As pointed out by the "La Presse", and others media, the July 15 short report (release twice a month) did show a record number of shares sold "short" for Bombardier Inc.. What is share sold short? Someone selling something they do not own (those sellers do not own what they sold, their broker borrow the shares from accounts like yours and let them sell those). Why? Because they expect to be buying them back lower. Don't worry, the broker requires a good amount of "Cash" from the borrower so that in case of a rapid increase in the share price those shares will be automatically bought back by the broker and put back into the account it was borrowed from at the lost ($) of the borrower who sold them short! Did I made this simple enough? Same mechanic applies when the borrower buys those shares back himself, it goes back to the real owner of those shares and the borrower keep the difference in the selling price vs the price he paid to buy them back, a profit if he bought them back lower, a lost if bought back higher. Ok?
Now what... Nothing says that all of those shares currently "short" were sold lower then the current price. Ah... look at the graph, Bombardier shares price. During the last 12 months the has been $2.75 and during last month $2.68 if I recall.
It closed at $2.41 today.
Last 12 Months Bombardier BBD.B Chart
So here it is...
Few things you have to know to put this record 100 million Bombardier BBD.B shares sold short. First, this is "not a Record float wise"... meaning that, yes, it is the first time so many shares were sold short but it has to be in regard of the total number of shares in circulation. It's like if I was telling about the score of the Blue Jays and not the other team... it means nothing.
Bombardier currently has almost 2 billions shares issued. 1,932675,863 to be precise with 101,091,820 shares short as of July 15 (these numbers are only reported twice a month). Meaning, 5.23% of the "float" (issued shares) have been sold short.
As you now understand, I'm assuming, what will be a record % of shares short is what we care, not the total number of them. Got it?
If we look back for what was the highest % of the float (issued shares) of Bombardier shares sold short, we have to go back to March 15, 2015. The percentage of Bombardier Inc. shares sold short was 6.22%, or, 89,784.886 over 1,444,173,242 shares issued. Worst than this month, July 15 report as reported by the media... But hey...
When I read those comments from the general press/media, not financial media... (well... some financial media reported it too out of perspective... or how to make Bombardier Inc. look bad?)
As usual, the record high "number of shares sold short" does not mean anything just by itself and I wanted to write about it but got caught in the new fantastic and fabulous version of a this amazing web site call http://www.fliegerfaust.com (yes, go ahead, share the news!!!) :-)
Now... when you read a sentence like "As a result, Bombardier is the most shorted company on the Toronto Stock Exchange" like I read in the Globe and Mail and elsewhere, it means nothing by itself as I just explained to you! Oh, yes, it tells you a lot about the person who wrote it... I rest my case.
Will Alain Bellemare and his CFO John Di Bert report that Bombardier Inc. is now in the the "Black with Q2? Slightly but still? Let's see tomorrow morning.
Link to La Presse article: http://plus.lapresse.ca/screens/9bd80161-febb-4af3...