Many of you will be familiar with the concept of “short selling”: borrowing shares and selling them and buying them back later.
In order for this trading tactic to work for the short seller – it always works for the lender, as they earn a few bob lending out shares that would otherwise just be sitting there in the portfolio – the shares have to fall a fair bit in price between the time they are sold and the time they are bought back.
A popular time, therefore, is to sell shares short ahead of the announcement of results, and this week it appears fashion firm and former stock market darling Burberry Group PLC (LON:BRBY) is in the sights of the short sellers.
According to financial information services provider Markit, Burberry currently has 7% of its shares shorted ahead of it earnings update on Wednesday.
“The company has been hit by slowing demand from emerging Asian markets, most specifically China, which sent its shares tumbling last year. Short sellers have been actively adding to their position as the firm’s shares retreated in earnest, but demand to borrow its shares has retreated from the highs seen earlier in the year when 9% of Burberry shares were out on loan,” Markit said.
Research from retail-focused stockbroker The Share Centre suggests it may be a fairly safe bet to assume Burberry's results will disappoint.
The Share Centre has trawled through a shed-load of results from FTSE 350 companies released during the first quarter of 2016, and came up with the headline-grabbing (they hope) conclusion that 2015 saw the weakest company results since at least 2007.
Revenues fell by 15.2% like-for-like from 2014's levels, and pre-tax profit by 42.7%.
You don't need a Datastream terminal to predict that the oil and mining sectors were among the hardest hit, while The Share Centre said banking profits dropped to their lowest level since the days of the credit crunch 2008.
Mid-caps outperformed their bigger brethren while The Share Centre concludes that the worst is now over for most sectors, although oil and banking face another tough year.
Try telling that to Union Jack Oil PLC (LON:UJO), the patriotically-named onshore oil and gas exploration company that has an 8.3% interest in the Wressle field, on the western margin of the Humber Basin.
Its shares shot up 15% or so this morning as it released its results in which it revealed it had cash in excess of £2.6mln and no debt.
With asset prices falling, no wonder it is contemplating adding more acquisitions this year to bolster its portfolio.
Sector peer Ithaca Energy Inc (LON:IAE, TSE:IAE) was also clocking up the clicks after its first quarter results.
If memory serves, Ithaca was the home of Greek hero Odysseus but unlike Union Jack Oil, the company's name gives no clue to its geographical area of operation; as it happens, it is, like Union Jack, focused on the UK, albeit offshore rather than onshore.
The shares were wanted after the company posted earnings per share of four cents and said it is on track for first production from the Stella field in September of this year.
In an ideal world, there would also be an update from Circe Oil [sic] to keep the Homerian theme going, but there is not, so let's make do instead with Sound Energy PLC (LON:SOU), the Italian energy company.
It said its Nervesa gas well is expected to be shut-in so that remedial work can be carried out.
The company said a second static profile assessment of the Nervesa reservoir has been carried out and this work confirmed a reducing reservoir pressure in the well, which is believed to indicate that not all reservoirs are in production.
Away from the resources sector, private investors are tuning into EVR Holdings PLC (LON:EVRH), the creator of virtual reality content, on its first day of dealings on Aim.
The bid-offer spread is currently 1p-1.05p.
The company is the successor to Armstrong Ventures, which acquired MelodyVR for £5.12mln late last month.