• Flight Centre remains most shorted stock on the ASX but its position has slightly improved
  • Kicked around BNPL, rate sensitive and health stocks also targeted by short sellers
  • Not good news for lithium and gold stocks with strong short positions heading into August

Market players are looking to short sell lithium, gold and BNPL sector stocks on the ASX, along with rate sensitive and healthcare companies. We’ve got all the details in this instalment of Short & Caught, where 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.

Code Company Short positions Shares on issue % short positions
FLT FLIGHT CENTRE TRAVEL ORDINARY 31,011,967 199,813,185 15.52%
BET BETMAKERS TECH GROUP ORDINARY 108,206,395 904,456,199 11.96%
NAN NANOSONICS LIMITED ORDINARY 34,883,508 301,835,129 11.56%
SQ2 BLOCK CDI 1:1 NYSE 4,368,797 38,077,304 11.47%
LKE LAKE RESOURCES ORDINARY 145,029,278 1,389,709,906 10.44%
EML EML PAYMENTS LTD ORDINARY 35,490,794 373,462,815 9.50%
RRL REGIS RESOURCES ORDINARY 68,199,758 754,977,388 9.03%
ZIP ZIP CO LTD.. ORDINARY 57,125,073 687,936,061 8.30%
PNV POLYNOVO LIMITED ORDINARY 54,542,325 661,688,044 8.24%
KGN KOGAN.COM LTD ORDINARY 8,756,560 106,927,603 8.19%
MSB MESOBLAST LIMITED ORDINARY 53,207,934 650,454,551 8.18%
CCX CITY CHIC COLLECTIVE ORDINARY 17,941,005 231,920,086 7.74%
ING INGHAMS GROUP ORDINARY 28,746,559 371,679,601 7.73%
CXO CORE LITHIUM ORDINARY 126,910,826 1,733,215,716 7.32%
IEL IDP EDUCATION LTD ORDINARY 20,190,954 278,336,211 7.25%
PDN PALADIN ENERGY LTD ORDINARY 207,809,628 2,977,779,002 6.98%
VUL VULCAN ENERGY ORDINARY 9,861,245 143,335,301 6.88%
WEB WEBJET LIMITED ORDINARY 26,061,504 380,851,484 6.84%
BGL BELLEVUE GOLD LTD ORDINARY 69,791,687 1,031,431,826 6.77%
CUV CLINUVEL PHARMACEUT. ORDINARY 3,339,874 49,410,338 6.76%
PNI PINNACLE INVESTMENT ORDINARY 13,478,273 199,560,297 6.75%
SBM ST BARBARA LIMITED ORDINARY 51,638,474 815,734,768 6.33%
ADH ADAIRS LIMITED ORDINARY 10,801,799 171,316,433 6.31%
PBH POINTSBET HOLDINGS ORDINARY 19,227,456 305,161,577 6.30%
TPW TEMPLE & WEBSTER LTD ORDINARY 7,571,968 120,514,583 6.28%
MP1 MEGAPORT LIMITED ORDINARY 9,679,594 157,974,016 6.13%
OBL OMNI BRIDGEWAY LTD ORD US PROHIBITED 16,258,544 268,639,670 6.05%
NEA NEARMAP LTD ORDINARY 29,583,202 500,054,764 5.92%
92E 92ENERGY ORDINARY 4,842,789 81,878,696 5.91%
DEG DE GREY MINING ORDINARY 82,803,340 1,410,232,647 5.87%
BOQ BANK OF QUEENSLAND. ORDINARY 37,681,018 647,357,479 5.82%
AMA AMA GROUP LIMITED ORDINARY 59,948,053 1,066,368,183 5.62%
NHC NEW HOPE CORPORATION ORDINARY 45,784,444 832,357,082 5.50%
IMU IMUGENE LIMITED ORDINARY 321,824,217 5,866,519,610 5.49%
FFX FIREFINCH LTD ORDINARY 62,756,345 1,181,243,221 5.31%
SYR SYRAH RESOURCES ORDINARY 35,306,526 669,442,809 5.27%
PME PRO MEDICUS LIMITED ORDINARY 5,335,808 104,320,631 5.11%
JBH JB HI-FI LIMITED ORDINARY 5,581,809 109,333,981 5.11%
MFG MAGELLAN FIN GRP LTD ORDINARY 9,400,944 185,088,874 5.08%
DYL DEEP YELLOW LIMITED ORDINARY 19,547,710 387,374,725 5.05%
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Flight Centre’s turbulence with short sellers

Flight Centre (ASX:FLT) founder and CEO Graham Turner must be getting tired of hearing the travel company remains the most shorted stock on the ASX.

After remaining the most shorted stock on the ASX in FY22, Flight Centre is still hitting turbulence with short sellers (never get tired of that line) into FY23. However, its short position has slightly improved from last month where it was at more than 16%.

As Stockhead’s Christian “I’m not expert on shorts ….but if you need an observation” Edwards noted:

“Flight Centre and a few other travel names have been screaming short me for what seems an eternity, and they face headwinds still.

“But at least for this week, CEO Graham ‘Skroo’ Turner’s FLT, has gotten a bit back on the sellers, lifting FY 22 guidance and sending the share price higher.”

Yep, Flight Centre is up 2.51% this week after amending its FY22 market guidance following a solid rebound in travel demand globally late in the year.


Lithium and gold stocks not feeling love

Not so good news for the speculative lithium sector or even gold stocks, with the precious metal seen as a traditional hedge against inflation.

Lake Resources (ASX:LKE) and Vulcan Energy (ASX:VUL) have increased short positions from last time, where their positions were 8.2% and 6.13% respectively.

But very near-term producer Core Lithium (ASX:CXO) is faring slightly better this month, down from 7.65%.

And gold producer Regis Resources (ASX:RRL) has seen its short position rise from 8.41% at the start of July, despite its share price rising more than 22% in the past month.

As Stockhead’s Reuben Adams pointed out gold hit a three-week high at the end of July on weak USD and the US Federal Reserve’s latest decision.

The price of the precious metal held steady around $US1,720/oz ahead of the Fed’s second consecutive 0.75 percentage point interest rate increase.

And Reuben also noted Regis, which multi-billionaire Andrew Forest launched and then abandoned a raid on, reported a strong June quarter and outlook.

While not on the most shorted list in August, coming in with 5.27% of its stock in short position is Syrah Resources (ASX:SYR), seeing a slight increase from 5.17% in July. The Mozambique focused graphite miner has been a favourite among short sellers over the years, frequently earning a place on the ASX most shorted stocks list.

Kicked around BNPL stocks a target

And we can’t not mention the two BNPL stocks Block Inc (ASX:SQ2) and Zip Co (ASX:ZIP) that have been made it to the top shorted stocks on the ASX.

As Reuben (making a strong appearance in this article) so aptly described, “the BNPL sector had been getting its arse kicked all year” but enjoyed a renaissance in July.

But Christian reckons shorting BNPL might still be a solid bet.

“Oh, um Block or Square or Rhombus, or whatever it is they’re calling the business that ate Afterpay, is a company whose creative peak was expressed in a meaningless rebrand and its purchase of the most bloated BNPL at its most bloated possible price,” he says.

“A company like Block has so much more self-inflicted damage to explore.”

Health sector not so healthy for shorties

Health stocks were also targeted by short sellers and have been throughout FY22, despite the sector being one of the best performers in July. The S&P ASX 200 healthcare index (ASX:XJO) has risen more than 8% in the past month.

Nanosonics (ASX:NAN), Polynovo (ASX:PNV) both have slightly fewer short positions compared to our last column but Mesoblast (ASX:MSB) has seen its positions lift.

Rate sensitive stocks make list

Short traders are lifting bets that pandemic-era sharemarket darlings will fall in value as surging inflation and falling household wealth impacts earnings.

The worsening macroeconomic indicators have many companies updating profit forecasts for 2023, with short sellers betting they risk missing guidance.

Among consumer discretionary stocks on the hit list of short sellers are City Chic Collective (ASX:CCX), Kogan (ASX:KGN), Temple & Webster (ASX:TPW) and Adairs (ASX:ADH). (I’ll happily to do my part and go on a clothes and homewares buying spree to help boost earnings.)

Disclosure: The author held shares in Regis Resources at the time of writing this article.