Short and Caught: Big Australian finds itself cut short
Link copied to
In Short & Caught, Stockhead recaps the ASX stocks that are the most shorted and have had the greatest increase in short interest right now.
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.
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.
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.
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.