In Short & Caught, Stockhead recaps the ASX stocks that are the most shorted and have had the greatest increase in short interest right now.

How does shorting work?

Shorting works by selling stocks you do not actually own in the hope of buying them back at a lower price. Investors are in effect betting they will fall.

Because shorting is restricted under Australian law, any substantial shorting of stocks is worth knowing about, even if you only trade long.

Stockhead has utilised the number of short positions as a percentage of total shares on issue. The most shorted ASX stocks all have 5.5 per cent or more.

Here are the top 20 most shorted ASX stocks

Code Company Short positions Shares on issue % short positions
BHP BHP GROUP LIMITED 520,012,237 2,950,251,394 17.6%
FLT FLIGHT CENTRE TRAVEL 30,116,594 199,607,700 15.1%
KLA KIRKLAND LAKE GOLD CDI1:1 146,530 1,000,000 14.7%
KGN KOGAN.COM LTD 11,836,007 106,888,209 11.1%
Z1P ZIP CO LTD 59,323,876 588,834,884 10.1%
MSB MESOBLAST LIMITED 61,734,883 650,454,551 9.5%
WEB WEBJET LIMITED 34,888,150 380,509,819 9.2%
PNV POLYNOVO LIMITED 55,241,729 661,688,044 8.3%
RBL REDBUBBLE LIMITED 21,512,924 275,920,223 7.8%
RRL REGIS RESOURCES 57,786,557 754,776,298 7.7%
OBL OMNI BRIDGEWAY LTD ORD US 19,432,993 264,980,845 7.3%
TPW TEMPLE & WEBSTER LTD 8,769,357 120,452,928 7.3%
BET BETMAKERS TECH GROUP 62,304,583 857,597,933 7.3%
APX APPEN LIMITED 8,893,084 123,074,916 7.2%
AMA AMA GROUP LIMITED 73,201,798 1,013,179,489 7.2%
MFG MAGELLAN FIN GRP LTD 13,290,726 185,713,004 7.2%
NAN NANOSONICS LIMITED 21,339,751 301,778,803 7.1%
TYR TYRO PAYMENTS 35,328,636 516,764,463 6.8%
EOS ELECTRO OPTIC SYSTEMS 9,578,796 150,914,229 6.3%
ING INGHAMS GROUP 22,342,486 371,679,601 6.0%
COE COOPER ENERGY LTD 91,655,223 1,632,734,600 5.6%
MTS METCASH LIMITED 53,825,709 965,541,602 5.6%
MND MONADELPHOUS GROUP 5,043,407 95,121,901 5.3%
EML EML PAYMENTS LTD 19,744,137 373,443,744 5.3%
IVC INVOCARE LIMITED 7,395,059 144,060,733 5.1%
NHC NEW HOPE CORPORATION 42,491,204 832,357,082 5.1%
PBH POINTSBET HOLDINGS 13,291,100 263,599,130 5.0%
CUV CLINUVEL PHARMACEUTICALS 2,476,982 49,410,338 5.0%
BRG BREVILLE GROUP LTD 6,808,562 139,359,544 4.9%
PDN PALADIN ENERGY LTD 128,607,199 2,678,940,987 4.8%
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The Big Australian BHP (ASX:BHP) had the greatest increase in short positions. Australia’s largest mining company was shorted as hedge funds looked to profit off the planned unification of BHP’s separate UK (BHP Plc) and Australian BHP (Ltd) listings into one, according to several analyst reports.

BHP’s share price dipped in November 2021 to $35.56 when the price of iron ore, its main profit generator, fell to ~US$80/t, but it has been up ~8% in January as the commodity’s prices recover.

Travel agent Flight Centre (ASX:FLT) – a company which has recovered in the past six months as Australia’s borders started to re-open both domestically and internationally – is the next most shorted stock.

There’s been a 15.1% increase in short interest in Flight Centre, as its CEO Graham Turner considers a fresh legal challenge against the Western Australian government’s decision to renege on its February 5 reopening date as it wanted more of its citizens to get their COVID-19 booster.

Discretionary stocks have had a rough run in recent times so it was probably no surprise to see (ASX:KGN), Temple & Webster Group (ASX:TPW) and Redbubble (ASX:RBL) on the short list.

Temple &Webster is one of the largest e-commerce players in the homewares and furniture space, while Kogan has a portfolio of online retail and services businesses.

Redbubble was one of the biggest beneficiaries from the COVID-19 ecommerce boom. Its price however has tumbled in the past year from a high of $6.68 in February 2021 to current price of ~$1.58.

But supply chain strife and several other headwinds has been pushing the overall consumer discretionary Index (ASX:XDJ) lower in recent times.