Wednesday, December 7

IAG’s biggest bear puts more pressure on omicron advance

The largest bearish investor in the shareholding of International Consolidate Airlines Group (IAG), the fund Citadel Advisors, has just increased the downward pressure by 17.4 percent, to 36.7 million shares, which now has 0.74 percent short.

Also, another division of the fund, Citadel Europe, has short positions on the Iberia parent company for 0.93 percent of the capital. Following the emergence of the omicron variant of coronavirus, at least six bearish investors have unveiled short positions in IAG.

Known shorts represent 206.4 million shares, or 4.16 percent of the company’s outstanding securities.

Bass players smell blood, but IAG keeps climbing

Specifically, the fund Sandbar Asset Management also has a short position in the airline of 0.58 percent, while Kinbury Capital holds 0.68 percent and the funds of Pictect 0.69 percent, according to Bloomberg data from the London market.

Most of these bearish funds retouched their positions in December, in the heat of the news about the expansion of the omicron variant.

However, the actions of IAG They defied all this downward pressure and marked a 13 percent gain streak in the last four sessions, which took the price this Monday to 1.73 euros.

Not even the harsh ‘profit warning’ announced by Ryanair had an effect on the price of IAG, which continued to accelerate the comeback in the final stretch after the heavy accumulated punishment.

Furthermore, the information flow on the sector, which has been especially negative in recent hours, has not been able to beat IAG either.

Specifically, there were more than 6,000 flights canceled around the world on Christmas Eve and Christmas due to omicron and the infections it produced in many crews.

Weeks of uncertainty for the sector

The bullish reaction of IAG This is bad news for investors who went short on their equity. Especially since the stock continues to recover positions despite the uncertainty that threatens the sector.

The omicron variant of the coronavirus is altering what is traditionally one of the busiest periods of the year for flight sales, the Christmas holidays. But the beginning of 2022 is also expected to be uncertain.

The CEO of Lufthansa, Carsten Spohrhe told the newspaper Frankfurter Allgemeine Sonntagszeitung that the group is experiencing a “sharp decline” in reserves between mid-January and February, and that the largest drop is observed in Germany, Switzerland, Austria and Belgium.

In this environment, further downward revisions to earnings like the one made by Ryanair cannot be ruled out, although other airlines may wait until they report their next financial results, analysts said. Sanford C. Bernstein.

The most positive reading for IAG and the rest of the sector is that a large part of the flights canceled on Christmas Eve and Christmas was due to infections in the crews, especially in the United States. But people still want to travel.

According to data from the airport manager ACI Europe, ómicron brought down passenger traffic in Europe by 20 percent between November 24 and December 15. However, there was a 9 percent recovery in the last week before Christmas, because people kept their travel plans, this source said.

IAG seeks the psychological zone of 2 euros

With this four-session streak going up, IAG it is attacking the resistance of 1.72 euros, after shaking off the bearish yoke.

Breaking this area “is important because precisely this is where a clavicular line of a double-bottom pattern that had formed in this last phase of correction passes,” said the head of investment analysis and, Josep Codina.

In the opinion of Diego morin, IG analyst, the key is a little higher, at 1.75 euros. The overcoming of which could give the value “an impulse towards the following resistance”.

Now, what would be left for the value to validate the bullish turn and end the corrective process is to finish closing the gap left in the last fall, which should leave the price close to the 1.8 euro area.

The theoretical objective of this double bottom pattern would be 2 euros, which is a psychological level that has not acted as such at other times, but which may now be important. In fact, there is the medium-term bearish guideline, he said. Morin.

And the next reference is the moving average of 200 sessions, it passes through 2.05 euros and precedes another major resistance, between 2.10 and 2.22 euros, explain the sources consulted. Before, there is the average of 50 sessions, important for the short term, which is at 1.78 euros and IAG has already practically within range.