Freightways: Cost to Borrow Quadruples as CFO Sells

FRW enters the final stretch of October with an unusual split: the stock is up 3.5% on the week while borrowing costs have risen sharply and insiders have been consistent sellers for two months.

The most striking data point this week is not price action but the cost of shorting. Borrowing costs have quadrupled over two months, climbing from around 0.45% in late August to 3.0% now, an 85% rise in the past week alone and a jump of more than 400% over 30 days. That kind of move in borrowing costs typically signals demand from short sellers looking to establish or maintain positions. Yet borrow availability remains extraordinarily loose, sitting near 3,055% of short interest, meaning there are roughly 30 shares available to borrow for every one currently lent out. So the rising cost tells a story of incremental short-side interest, not a squeeze or a crowded positioning event. Short interest itself remains negligible at well under 1% of free float, and the ORTEX short score of 29.5 has been virtually flat for two weeks. The borrow market is becoming more expensive, but it is nowhere near tight.

The insider picture adds a layer of caution. The clearest pattern over the past 90 days is selling from CFO Stephan Deschamps, who has offloaded shares on at least five separate occasions between September 1 and September 22, selling NZD 19,500 to NZD 26,600 per trade at prices ranging from NZD 13.10 to NZD 13.30. General Manager Neil Wilson also sold around 19,000 shares across several days in early September, raising a combined NZD 158,000. Against that, Non-executive Director Grant Devonport bought 2,000 shares at NZD 12.28 on September 16, a modest but contrary signal. Net insider flows over the 90-day window amount to around NZD 515,000 in net selling across roughly 38,700 shares. The sales are small relative to the company's market cap of approximately NZD 1.3 billion, but the consistency from the CFO is worth noting.

The Street appears more constructive than insiders. The analyst consensus price target stands at NZD 15.17, implying roughly 19% upside from the current close of NZD 12.73, and the data is fresh as of October 28. Factor scores reflect a mixed but not alarming picture: the forward earnings growth score ranks in the 83rd percentile, suggesting analysts see meaningful improvement ahead, while the dividend score is exceptionally strong at the 92nd percentile. The valuation, at a PE of around 17.3 and an EV/EBITDA of 8.9, has edged higher over the past 30 days as the stock has recovered, but neither multiple looks stretched for a New Zealand logistics operator with that kind of consensus target. EPS surprise history is weak (23rd percentile), which complicates the bull case: the forward numbers look promising, but the company has a habit of missing them.

Among nearby peers on the New Zealand exchange, MFT gained just under 1% on the week, well behind FRW's 3.5%, though that gap may partly reflect FRW's post-earnings bounce. The most recent earnings print, announced on October 28, produced a single-day move of plus 5.6%, reversing a 2% decline from an event five days earlier. The two prior results from August produced more modest reactions, a fractional gain and a 4.5% drop, giving the recent history a broadly symmetric look with no strong directional pattern across events.

What to watch: whether the sustained rise in borrowing costs attracts genuinely larger short positions or remains a pricing artefact at very low utilisation, and whether the CFO's selling programme continues now that the stock has retraced to levels below where those September sales were executed.