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Short and Caught: It appears investors are responding to takeover bids… by shorting the targets’ rivals
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In Short & Caught, Stockhead recaps the ASX stocks that are the most shorted 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.
| Code | Company | Price | Short Positions | % of shorts | Market Cap |
|---|---|---|---|---|---|
| WEB | Webjet | 5.09 | 43,108,377 | 11.37% | $1.9B |
| Z1P | Zip | 7.74 | 60,508,676 | 10.76% | $4.4B |
| FLT | Flight Centre | 14.86 | 19,117,398 | 9.59% | $3.0B |
| KGN | Kogan | 11.23 | 9,110,633 | 8.55% | $1.2B |
| EOS | Electro Optic Systems | 4.19 | 12,768,511 | 8.46% | $632.3M |
| ING | Inghams | 3.88 | 31,061,832 | 8.36% | $1.4B |
| TGR | Tassal | 3.57 | 16,650,967 | 7.84% | $758.1M |
| PNV | Polynovo | 2.23 | 46,976,015 | 7.10% | $1.5B |
| A2M | A2 Milk | 5.93 | 50,249,279 | 6.76% | $4.6B |
| MSB | Mesoblast | 1.96 | 41,934,758 | 6.46% | $1.3B |
| IVC | InvoCare | 10.77 | 9,288,750 | 6.45% | $1.6B |
| TPW | Temple & Webster | 12.33 | 7,621,659 | 6.33% | $1.5B |
| MTS | Metcash | 4.16 | 63,697,066 | 6.23% | $4.3B |
| RSG | Resolute | 0.54 | 66,346,367 | 6.01% | $529.8M |
| COE | Cooper Energy | 0.24 | 94,445,274 | 5.79% | $375.6M |
| BGL | Bellevue Gold | 0.98 | 49,388,088 | 5.75% | $841.4M |
| AMA | AMA Group | 0.48 | 38,191,401 | 5.12% | $359.8M |
| OBL | Omni Bridgeway | 3.82 | 12,596,806 | 4.80% | $1.0B |
| AVH | Avita Medical | 5.1 | 3,290,268 | 4.75% | $635.7M |
| PLL | Piedmont | 0.78 | 26,931,176 | 4.68% | $1.2B |
Shorting takeover bid rivals?
Two of the top 20 shorted stocks are competitors to recipients of takeover bids.
One is Zip (ASX:Z1P) which is a BNPL stock in competition with Afterpay (ASX:APT). Zip has been in the top 20 for some weeks but its short positions have increased from 42 million to over 60 million in the past couple of months.
Another takeover target that investors are shorting is seafood company Tassal (ASX:TGR). Its main competitor Huon Aquaculture (ASX:HUO) is being bought by Brazilian meat giant JBS.
Other consumer stocks make up the majority of the rest of the list including travel agents Webjet (ASX:WEB) and Flight Centre (ASX:FLT) which have been impacted by the latest downturn in the travel sector.
The health sector meanwhile counted for four places and two new stocks are burns treatment stocks Avita Medical (ASX:AVH) and PolyNovo (ASX:PNV).
Resources, energy and health shorting targets
Two of the odd ones out, and new companies to make the list, were Cooper Energy (ASX:COE) and Piedmont Lithium (ASX:PLL).
Cooper is a South Australian oil and gas company which has had a difficult year from a share price perspective.
Despite the run in the oil and gas sector driven by rising prices, Cooper shares have dropped 40% in a year.
The company has been downhill since its half yearly results in February where despite record production and sales, it recorded a $23.1 million after-tax loss. Another blow came in July when it downgraded its production guidance.
Piedmont (ASX:PLL) meanwhile has had a more solid run overall in the last 12 months, winning a Tesla contract.
But shares are off all time highs since the company delayed seeking approval from Gaston County in North Carolina for its proposed lithium mine.
