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TOKYO: Shares in Mitsubishi Motors Corp jumped as much as 11 percent to a five-month high of 1,291 yen on Friday morning, driven by some short-term investors' cutting their short positions in the Japanese automaker.
Short-term investors have been heavily shorting Mitsubishi Motors, which announced last week that it would raise up to 241.63 billion yen ($2.32 billion) in a public share offering to help buy back most of the preferred shares issued to Mitsubishi group companies.
The cut in their bearish bets was due to expectations that retail investors appeared to be interested in the offering.
"The stock is massively shorted. The natural impression from foreign event guys has been an obvious short because they are issuing something like 40 percent dilution, possibly 60 percent dilution depending on how you measure it on earnings per share," a Tokyo-based trader said.
"The surprise is that retail investors are hungry for the stock because essentially what they have done is to issue equities to pay off the debt and resolve an ongoing issue that has overweighed the stock."
Group companies including Mitsubishi Heavy Industries Ltd , Mitsubishi UFJ Financial Group Inc and Mitsubishi Corp rescued Mitsubishi Motors in 2004 by taking the bulk of a preferred share offering after a failed tie-up with then-DaimlerChrysler AG.
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