Guide:

The Short Report draws upon data provided by the Australian Securities & Investment Commission (ASIC) to highlight significant weekly and monthly moves in short positions registered on stocks listed on the Australian Securities Exchange (ASX).

Please take note of the Important Information provided at the end of this report. Percentage amounts in this report refer to percentage of ordinary shares on issue.

Summary:

Period: Week to, and month to, May 7, 2013

Revisions to short position, either up or down, were seemingly the last thing investors were thinking about last week. Instead, the market watched as more quarterly reports, especially production reports from miners, rolled in.

Unsurprisingly, miners and resources-related stocks dominated the lists, with Short Report regular Myer the only exception on a weekly basis. When the dust had settled, there were only three stocks for which short position shifted by one percentage point (ppt) or more, two higher and one lower. There were ten moves of over 2ppt over the month, eight of those were increases.

Weekly Short Increases (+/- 1ppt)

Shorts in Beadell Resources ((BDR)) increased to 2.92% from 1.30%.

Macquarie noted yesterday the current macro environment is presenting ongoing downside for the gold sector. Despite this, Beadell remains the broker's key pick in the space because of its high grade profile, low cash costs and cash flow. Macquarie increased production forecasts to 226,000 ounces for 2013 at cash costs of US$486/oz and maintained its Outperform rating. UBS noted three weeks ago March quarter production came in short of expectations, but this did not overly concern UBS, as the focus is on the ramp up at Tucano. Final approvals for Duckhead are still pending and this was viewed as a potential catalyst for the share price along with commissioning of the magnetic separation plant to produce the first iron ore concentrate for sale. Buy/Hold/Sell (B/H/S) ratio: 4/0/0

Shorts in Boral ((BLD)) increased to 4.26% from 3.24%.

The company reported 3Q numbers last week and the reception was mixed, with BA-Merrill Lynch downgrading to Hold and JP Morgan upgrading to Hold. Merrills noted Boral had been cutting headcount costs, but still failed to stem the fall in earnings. The Australian market has quite simply disappointed against the broker's expectations hence the downgrade. An Underperform rating might have been on the cards but for the obvious housing recovery in the US and growth opportunities in Asian plasterboard, the broker said.

JP Morgan noted Boral has started to have some serious issues with the weather after what was a fairly issue-free 1H. The 3Q report unwound all of the good weather upside that was accumulated, with 3Q earnings falling $19m short of management's expectations. The FY net profit guidance was pegged at $90-$105m, although stripping out the chaff showed an underlying net profit of just $19m. That's how tough it is out there, said the broker. JP Morgan's FY13 net profit forecast was cut by 27%, with FY14-15 down around 10%. That being said, the broker still expects net profit to double in 2014 on the back of announced cost savings, the reversal of some one-offs and hopefully a still ongoing recovery in the US. In short, the broker saw only minor prospective valuation downside and a number of catalysts that are skewed to the upside. B/H/S: 3/4/1

Weekly Short Decreases(+/- 1ppt)

Shorts in Myer ((MYR)) decreased to 13.66% from15.21%.

The last big word on the stock came from Deutsche Bank at the end of April when it upgraded its recommendation to Buy from Hold. The broker suggested that while discretionary retailers have outperformed the market so far this year, the market still seems to have an appetite for these stocks. In this case, Myer represents the best opportunity given a reasonable valuation and strong free cash flow. The company is also delivering like-for-like sales growth and is addressing structural issues, noted Deutsche Bank. B/H/S: 2/3/3

Monthly Short Increases(+/- 2ppt)

Shorts in NRW Holdings ((NWH)) increased to 7.66% from 4.26%.

Deutsche Bank said last week the best way to summarise its decision to downgrade to Hold from Buy is "it's not the company's fault". The analysts acknowledge NRW Holding is well managed with a strong project delivery and execution track record. Alas, the company is exposed to the slowing domestic iron ore sector and mining companies are focused on reducing costs; and they will continue to do so. Deutsche Bank predicted significant margin pressure will be the consequence. Earnings estimates for FY14 have were reined in, the price target cut and DPS forecasts slashed. B/H/S: 4/2/1

Shorts in Troy Resources ((TRY)) increased to 4.17% from 0.80%.

The Bidder's Statement and Target's Statement for the takeover of Azimuth Resources ((AZH)) were mailed out to both sets of shareholders last week.

Shorts in Drillsearch ((DLS)) increased to 3.91% from 0.70%.

UBS reported at the beginning of the month that March quarter production came in well ahead on the back of a faster than expected ramp up in Bauer oil production. Sales revenue was strong, not only on the higher production volumes, but also on a better than expected realised price. JP Morgan initiated coverage last week with an Overweight recommendation, noting the company offers exposure to the Cooper Basin, particularly conventional oil, and the wet gas is becoming more valuable in the broker's view, thanks to east coast gas market dynamics. Drillsearch is less leveraged than its Cooper-focused peers to the success of Cooper unconventional exploration, which JP Morgan also likes. Potential stock catalysts over the next 6-12 months include the ramp up of oil and wet gas production, and testing of unconventional acreage. B/H/S: 4/0/0

Shorts in Whitehaven Coal ((WHC)) increased to 10.13% from 7.04%.

BA-Merrill Lynch confirmed at the beginning of the month that March quarter production was in line with expectations. The company's FY13 production guidance is for 9m tonnes of ROM coal. On the broker's estimates this equates to a 4% reduction in guidance since the first half result. The company has indicated that weak coal markets are continuing to impact on performance. Meanwhile, Deutsche Bank said it might have been a weak quarter, but the broker thought it was still pretty good given the difficulties faced over the period. On the other hand, FY13 production has been downgraded and realised price expectations have been lowered. On the upside, Narrabri is showing some good signs of progress and the broker is also confident the moisture issues will be sorted after the first long-wall change in June. The broker also sees compelling value at current levels. B/H/S: 6/2/0

Shorts in Beadell Resources ((BDR)) increased to 5.16% from 2.46%.

See above.

Shorts in Monadelphous ((MND)) increased to 12.11% from 9.58%.

UBS reported last week that it believes Monadelphous' end markets have deteriorated, predicting an earlier-than-expected decline in earnings, i.e. FY14 rather than FY16. The broker upgraded FY13 earnings forecasts by 1.5%, but reduced FY14-15 by 18%. B/H/S: 1/1/5

Shorts in SAI Global ((SAI)) increased to 6.86% from 4.37%.

JP Morgan noted last month the company had reiterated FY13 guidance, but reduced the medium term margin outlook for the Compliance division. The broker also cut its earnings margin estimates to 35% for the Compliance division in FY15 and beyond. JP Morgan is cautious, as SAI Global has made many downgrades to guidance in the recent past. B/H/S: 2/5/1

Shorts in ALS ((ALQ)) increased to 6.58% from 4.26%.

CIMB reported last week it had reviewed the sector and thinks ALS is unlikely to surprise the market when results are furnished at the end of May. A slower-than-expected recovery in exploration activity led to a downgrade in the FY14 earnings forecasts by 20%, which suggests FY14 earnings contraction of 11% on FY13. B/H/S: 2/3/3

Monthly Short Decreases(+/- 2ppt)

Shorts in Syrah Resources ((SYR)) decreased to 0.24% from 4.83%.

The company reported last month it is set to resume diamond drilling at its Balama Graphite and Vanadium Project in north Mozambique this month, which is likely to be highly anticipated given the claim results have been impressive to date. In 2012, Syrah defined a tier 1 deposit of graphite in terms of quality and size.

Shorts in Metcash ((MTS)) decreased to 8.33% from 11.29%. B/H/S: 1/6/1