Why I shorted ZINC – Horsehead Holding Corp.

Horsehead Holding Corp. (ZINC) is the parent company of Horsehead Corporation, producer of specialty zinc and zinc-based products.

Following ZINC for some time but when I saw 2 negative revisions in the past few weeks and its current year earnings consensus has moved lower over the last 30 days, I thought there may be more trouble down the road…

I’ve also expected an offering at some stage (to be honest not this quickly – thought some PR on the way first) but it once again confirms how desperate things have been for ZINC. Yesterday evening (after hours) ZINC announced that it has established an at-the-market (“ATM”) equity program under which the Company may offer and sell, from time to time, shares of its common stock having an aggregate value of up to $50 million through Stifel, Nicolaus & Company, Incorporated, as sales agents….

Apart from the company itself the overall outlook for the Zinc as a material is not great at the moment (hence a stronger short arguement). Zinc metal market prices have been under pressure since September, falling 18%  to a low of $1,981 per tonne (from $2,416). The Zinc is in over-supply at the moment and expect falling prices in the short term. Infra structure projects in China was fuelling Zinc’s growth but as China is slowing down it is more bad news on the horizon for ZINC….

I am not intending to keep my short for a long time, I will cover soon to pay myself and move on before the longs show interest…

ZINC  Capture2