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

Syrah Resources (ASX:SYR) and Galaxy Resources (ASX:GXY) remained first and second with virtually no change in either of them. Both stocks have around 70 million shares shorted.

Coming in third is Queensland’s Senex Energy (ASX:SXY) which has fallen 20 per cent over spring as the oil market continues to remain weak. Shareholders continued to heavily short Metals X (ASX:MLX), which is now down 70 per cent in 2019 with production cuts last month stemming the tide.

Shareholders of Botanix Pharmaceuticals (ASX:BOT) and management are not singing from the same hymn sheet. While management said the clinical trial for its anti-acne drug was a success because it met secondary endpoints, its failure to meet the primary endpoint led to the stock halving and it has stagnated since.

Notable drops among heavily shorted stocks include Dacian Gold (ASX:DCN), which still has 15.7 million in shares shorted, but this is down 15 per cent in a month. It is a similar story with retailer Adairs (ASX:ADH) whose short interest is down 27 per cent. Both stocks saw sharp drops in June but have recovered.

The newly shorted

One of 2019’s few IPO disappointments has been Life360 (ASX:360) but it’s taken over six months for shorters to act. It has shrunk by more than a third since listing despite user gains.

Stocks caught in sticky situations earlier this year were a target for shorters in recent days. These included rare earths explorer Hastings Technology Metals (ASX:HAS) which flunked a capital raise and cannabis company Althea (ASX:AGH) which saw a substantial holder sell out and at a hefty discount.

Cash Converters (ASX:CCV) recently put a three and a half year legal battle behind it, putting it on the radar of shorters. It had been accused of charging excessively high interest rates.

Boss Resources (ASX:BOE) is one of many uranium explorers hoping that prices will recover soon. Shorters evidently think it will be longer than Boss would like.