First Data deal has turned Fiserv into a big short play

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Once-sleepy Fiserv Inc. has become the top short play among payments and data-processing companies in the months since it announced an all-stock deal for First Data Corp.

Short interest in Fiserv












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 was just $463 million before the company set out in January to acquire First Data












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 in a deal valued at $22 billion. By the end of January, short interest had climbed to over $3 billion, according to analysts at S3 Partners, and it currently stands at $5.3 billion as bears continue to build their short positions.

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Fiserv now ranks above Visa Inc.












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 and Fidelity National Information Services Inc.












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the next largest short plays in the data-processing and outsourced-services sector with upwards of $4.5 billion in short interest each. Fidelity National Information Services is involved in a mega-merger of its own, after announcing in March that it would be buying Worldpay Inc.












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 in a cash-and-stock deal valued at $43 billion.

Short interest in Fiserv has mounted in recent months, even as the stock has climbed. Bears are staring down $791 million in mark-to-market losses so far in 2019, and as the shorting continues, S3’s Ihor Dusaniwsky thinks that “the buildup in short interest is more than a merger-[arbitrage] position.” Bears might also be making a bet that Fiserv will disappoint with its next quarterly report, due out Thursday after the closing bell.

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Just yesterday, Fiserv bears shorted another 1 million shares, bringing total shares shorted to 55.78 million. So far this year, the company has seen shares shorted climb by 760%, or 49.3 million shares, but Dusaniwsky says the activity might ease up in the coming days.

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“Whether Fiserv beats or misses its second quarter expectations, there will probably be some short covering after the earnings announcement,” he wrote. “Shorter term short sellers will either rush to close their positions to limit losses on an earnings beat, or close their positions to realize profits on an earnings miss.”

Shares have gained 30% so far this year, as the S&P 500












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 has climbed 20%.



Source : MTV