Short Sellers Pile Into Russia's Mail.ru as Price Swings Widen

Bears are piling into Mail.ru Group Ltd., the Russian Internet company backed by billionaire Alisher Usmanov, at a record pace.

Short interest, or the portion of the stock borrowed by investors to bet that the price will fall, jumped to 6.8 percent of shares outstanding on March 8, the most since the company’s 2010 initial public offering in London, according to data compiled by Bloomberg and Markit. The average short interest in six global peers is 2.7 percent. Bearish best on Mail.ru had hovered around 2.6 percent of shares outstanding in early February before increasing as historical 90-day volatility, a measure of price swings, rose to a nine-month high of as much as 47 percent.

The company’s 2015 sales grew 11 percent, Mail.ru said in a statement in February. An average of 15 analysts surveyed by Bloomberg called for a increase of 24 percent. A plunging ruble has threatened profitability at Mail.ru, which has expenses including office rent linked to the dollar. The company trades at 26.6 times projected earnings for the next four quarters, data compiled by Bloomberg show, compared with 16.8 times at the end of 2014.

“Revenue growth figures are not bad, but if you factor in the ruble weakening, you don’t see anything spectacular,” said Konstantin Chernyshev, an analyst at UralSib Capital who rates the stock a sell. “At current levels, it seems to me that the stock is overvalued.”

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