Short and Caught: The ASX stocks investors are shorting right now

Short & Caught is Stockhead’s fortnightly recap of which ASX small cap stocks are heavily shorted. Stocks that are shorted have investors betting that they fall.

Shorting works by selling stocks you do not actually own in the hope of buying them back at a lower price.

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

Stockhead’s two preferred metrics are raw short interest as well as percentage changes in them within the last month.

 

The most shorted

The two most shorted small caps remain Syrah Resources (ASX:SYR) and Galaxy Resources (ASX:GXY) as the markets for their respective commodities, graphite and lithium, remain oversupplied.

Notable risers up the list of stocks with short interest above 5 million shares included MetalsX (ASX:MLX), which has 41.3 million shares shorted.

Last Friday the company said it was falling short of its targeted increase in mining production rate to 2 million tonnes per annum and it fell over 20 per cent. Its fall has continued this week.

Among non-resources stocks StarPharma (ASX:SPL) has 11.6 million shares shorted – a rise of 20 per cent in a month. This was despite the company launching its anti-bacterial vaginosis (BV) gel in the UK last week.

Also, heavily shorted is internet of things play Buddy Technologies (ASX:BUD), which has 5.7 million shares.

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The newly shorted

Of stocks with less than 5 million shares shorted but with hefty increases in recent weeks, the leader is Alkane Resources (ASX:ALK).

The gold and copper explorer is up 70 per cent, triggered by the discovery of porphyry style mineralisation at its New South Wales project.

It is undertaking follow-up drilling.

Pain detecting app PainChek (ASX:PCK) has never looked back since its watershed funding agreement from the Morrison government. It’s up nearly 10 times since then.

But there is now 134,000 shares shorted – 1,290 per cent more than a month ago.

Another one of 2019’s successful stories (in fact, the most successful among IPOs), Uniti Group (ASX:UWL) also has short interest to the tune of just over $2m.

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