By Andrew Nelson

The Week from the 20th and 27th of February was another subdued one for shorting and short covering activity on the Australian share market. There were just two stocks that saw their short position increase or decrease by more than one percentage point (ppt) on a weekly basis, while there were seven stocks that saw their short position move by more than 2ppt on a monthly basis.

Shorts in Australian satellite operator NewSat ((NWT)) increased 1.36ppt from 0.03% to 1.39% after news the company had finally secured the $US600m in funding it needs to launch Australia's first independently owned commercial satellite. Now only one obstacle remains, the 2015 liftoff: CEO Adrian Ballintine claims the company will eventually be generating over $3.5bn of revenue with an 80% margin for 15 years.

Cochlear ((COH)) saw its short position advance 1.05ppt from 7% to 8.05%. The 1H result at the beginning of last month was not a good one and saw one of the last two fence sitters downgrade to Sell. The broker made the call on one big issue, a flat earnings growth outlook until at least FY15 versus a very high multiple. The only broker left not at Sell is BA-Merrill Lynch, its Hold call supported by a valuation premium to account for lower regulatory risk and higher competitive barriers to entry. One Hold call doesn't make much of a dent in the other seven Sell calls in the FNArena Database, meaning the stock maintains a very low level of sentiment.

Not one stock saw its short position come off by more than 1ppt, but Transpacific ((TPI)) was close, shorts slipping 0.97ppt from 1.6% to 0.63%. Macquarie upgraded its call to Buy from Hold over the week in question, encouraged by the modest improvement in the company's earnings trajectory. The broker saw slow but steady progress in improving operations in the 1H result. Sentiment for the stock remains positive.

There was a bit more action on a monthly basis. SingTel ((SGT)) led the charge, its short position rising 3.27ppt from 3.22% to 6.49%. Citi noted in mid-February that the company's 3Q report missed the market by 4% given the ongoing difficulties being faced by the Singapore business and unfavourable currency movements. The broker is also feeling cautious given the uncertainties that are still on the radar via Australia's potentially expensive LTE spectrum auction.

Shorts in Ansell ((ANN)) were up 2.6ppt from 2.68% to 5.28%. Both Citi and Macquarie downgraded their calls to Hold from Buy in mid-February. Macquarie noted growth needs to turn around 39% to hit FY guidance. Given the doubts about delivering this via a strong second half, Macquarie did not see upside at current trading levels. Citi walked away from the report with a vastly shifted opinion, one that has gone from seeing risks to the upside to seeing risks to the downside. Sentiment has moved to negative post the mid-February downgrades.

Fleetwood Corp ((FWD)) saw it short position lift 2.24ppt from 2.95% to 5.19% after reporting a weaker than expected 1H result towards the latter end of February. Credit Suisse, currently at Sell, said the weak first half result should turn out to be the low point in profitability. The broker nonetheless maintains there are still risks given the operating outlook.

Shorts in GUD Holdings ((GUD)) were up 2.16ppt from 3.31% to 5.47%. The company delivered a ho-hum result back at the end of January. Sentiment remains in negative territory. Shopping Centres Australia ((SCP)) saw its shorts rise 2.11% over the month, moving from 1.57% to 3.68%. Deutsche Bank picked up coverage on the stock last month with a Sell call, feeling that despite the security offered by major leaseholder Woolworths ((WOW)), the company is still looking at some distinct growth challenges.

Gryphon Minerals ((GRY)) was up 2.03ppt from 4.73% to 6.76%. The stock shows perfect sentiment in the database, with Macquarie noting last month the company had released its bankable feasibility study for Banfora. The study confirmed solid start-up expectations and thus the broker sees ongoing upside for the share price. The next key steps to delivering value will be a demonstration of the ability to fund the project, via a mix of cash on hand, debt and equity, said Macquarie.

Just one stock saw its short position pull back by more than 2ppt on a monthly basis. The winner is Alumina ((AWC)), shorts coming off 2.32ppt from 6.77% to 4.45%. The last week of February was a busy one for the stock, with Credit Suisse upgrading its recommendation to Hold and Macquarie downgrading to Hold. Macquarie noted that while the company's placement did fix the balance sheet, the company still posted a $53m loss and declared no dividend. Guidance is flat and despite the lower gearing, AWC may still look to offload assets. Sentiment has hung on to a positive footing.

The Top 20 most shorted stocks in the market list looks almost unchanged. There were a couple of minor position swaps, while Mesoblast ((MSB)) has dropped off the list from the number 20 spot, replaced by Buru Energy ((BRU)).