Short and Caught: Short Now, Buy Later as the BNPL sector sits firmly in Shorties’ sights
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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.
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%|
|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%|
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.
Not so good news for the speculative lithium sector or even gold stocks, with the precious metal seen as a traditional hedge against inflation.
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.
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 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.
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.