Each fortnight Stockhead recaps which ASX small cap stocks are heavily shorted. Stocks that are shorted have investors betting that they fall.

Shorting works by “selling” stocks you do not actually own in the hope of buying it back at a lower price.

Considering the restrictions surrounding shorting, any substantial shorting of stocks is worth knowing about even if you own these stocks and only trade “long”.

Read More: The Secret Broker: What it really means to ‘go short’ and why you’re probably not ready for it 

Short interest

When we first ran this column, we observed African petroleum stock FAR (ASX:FAR) as the most shorted stock with $95m in short interest. Last fortnight we observed it had fallen to $20m.

But yesterday it was shorted once more with nearly $90m in short interest. After being as low as 5.6c in mid-June it is now at 7.5c.

There has been no news out of the company but there had been speculation in the media about raising capital or perhaps selling its project. The company announced it had “no update outstanding” but reiterated it had “a world class project”.

Syrah Resources (ASX:SYR) and Myer (ASX:MYR) were also heavily shorted recently with $66.7m and $63.3m, respectively. The struggles of the latter company have been well-documented. This last month Myer’s stock has fallen nearly 20 per cent and with no sign of its situation improving, it is an ideal target to “short”.

One newcomer to the list was wind farm operator Infigen Energy (ASX: FR). Its wind farms in South Australia have not been performing well as of late.

Its last monthly update saw two of its Lake Bonney farms go backwards by over 40 per cent in gigawatts per hour. Investors are betting this will continue.

Code Name Price Short Interest Market Cap
FAR FAR LTD 0.07 89.68M 433.35M
SYR SYRAH RESOURCES LTD 0.85 66.74M 333.11M
MYR MYER HOLDINGS LTD 0.55 63.33M 447.60M
INR IONEER LTD 0.13 38.97M 199.12M
CLQ CLEAN TEQ HOLDINGS LTD 0.4 38.59M 283.65M
MRM MMA OFFSHORE LTD 0.18 31.49M 150.16M
LNG LIQUEFIED NATURAL GAS LTD 0.25 31.32M 134.38M
MLX METALS X LTD 0.25 31.08M 168.82M
AJM ALTURA MINING LTD 0.12 28.37M 244.43M
IFN INFIGEN ENERGY 0.47 17.96M 454.37M
SEA SUNDANCE ENERGY AUSTRALIA LTD 0.28 17.89M 189.08M
EWC ENERGY WORLD CORP LTD 0.06 16.07M 105.94M
NCZ NEW CENTURY RESOURCES LTD 0.47 15.89M 245.28M
BWX BWX LTD 1.96 15.71M 226.76M
DCN DACIAN GOLD LTD 0.51 15.07M 119.63M
KAR KAROON ENERGY LTD 0.96 11.15M 235.14M
ECX ECLIPX GROUP LTD 1.25 10.55M 418.72M
GRR GRANGE RESOURCES LTD 0.26 10.36M 300.91M
PDN PALADIN ENERGY LTD 0.12 10.32M 219.01M

Short interest as % of free float

There was little change this fortnight, although Dacian Gold (ASX:DCN) has entered the list. Investors have gone cold on the stock since production downgrades last month despite making new discoveries.

The highest stock was Syrah Resources (ASX:SYR), with its ratio rising from 15 per cent to over 18 per cent in the last fortnight. The stock has fallen over 12 per cent in a month and over 57 per cent since late January.

Analysts have been betting it will rise again. Credit Suisse, predicted it could rise to $2.40 while Macquarie, Canaccord and Morgan Stanley predicted it could at least rise above $1 again. But shorting investors think otherwise.

Code Name SI % Eqty Flt Market Cap Price
SYR SYRAH RESOURCES LTD 18.23% 333.11M 0.88
BWX BWX LTD 15.51% 226.76M 1.83
KGN KOGAN.COM LTD 13.47% 445.22M 4.75
WGN WAGNERS HOLDING CO LTD 11.38% 290.48M 1.8
MYR MYER HOLDINGS LTD 8.94% 447.60M 0.55
CLQ CLEAN TEQ HOLDINGS LTD 8.27% 283.65M 0.38
DCN DACIAN GOLD LTD 7.88% 119.63M 0.53
KAR KAROON ENERGY LTD 5.80% 235.14M 0.95
LNG LIQUEFIED NATURAL GAS LTD 5.76% 134.38M 0.23
MLX METALS X LTD 5.64% 168.82M 0.25
CLH COLLECTION HOUSE LTD 5.49% 168.53M 1.21
MRM MMA OFFSHORE LTD 5.08% 150.16M 0.17
NCZ NEW CENTURY RESOURCES LTD 5.00% 245.28M 0.49