Shares in EML Payments Ltd (ASX: EML) have levelled off after a short-lived recovery in March. From the beginning of last month, EML shares thrust off a low of $2.20 per share and raced north to touch the ceiling at $3.01 apiece.
Since, prices have taken a step backward and rest at $2.80 per share before the open of trade on Thursday.
The shortened week has done nothing to save EML's stock either, with the share price sliding more than 13% since trading restarted in January.
EML also leads the list of companies with the largest amount of short interest as a percentage of free float, and it's been embroiled in takeover drama with private equity giant Bain Capital.
Before the open on Thursday, EML has a short interest ratio of 15.2 with more than 34.5 million shares in the hands of short-sellers. It hit a high of 33.5 two weeks ago. As such, 9.2% of its shares are under short interest.
Why are investors bearish on EML?
Interestingly, bearish wagers on ASX names have increased over the past few weeks, and again week-on-week to Wednesday.
"Total Australian short interest [was] A$21.5 billion vs. A$21.3 billion last week; [whilst] bearish bets [were] equivalent to approximately 1.08% of equity float," according to Bloomberg Intelligence, from internal calculations.
Of the entire market, consumer discretionary and information technology sectors are most shorted, with 2.4% of short interest in each segment, Bloomberg data shows.
Arguably, both of these industries have spillover into EML, considering it's a technology-based payments company that relies on customer transactions to generate operating income.
In fact, a quick check sees that these 3 'instruments', let's call them, have moved in almost unison since October last year.
Last week, EML released a statement advising it had been in talks with Bain Capital last year for a purported buyout.
As TMF reported at the time, Bain walked away "because of the high price tag after looking at the due diligence numbers."
"The board of EML said that it would always consider proposals presented to the company and that it's fully committed to acting in the best interests of shareholders. The goal of EML's board is to maximise value for shareholders," it was reported.
Investors weren't galvanised by the outcome and refused to allocate more capital to EML shares, meaning the stock remains in the lurch for 2022.
Ron Shamgar of Tamim Asset Management appeared to see the reasoning behind Bain's decision, in a post last week.
"If ASX investors won't value businesses properly, then others will take them off their hands and reap the rewards over time!" he wrote.
The EML share price is down more than 49% in the last 12 months despite a 14% surge over the past single month.
