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.

The most shorted

For many weeks Syrah Resources (ASX:SYR) and Galaxy Resources (ASX:GXY) led the list, but for the second time in a row lithium and tantalum miner Pilbara Minerals (ASX:PLS) was on top.

Syrah’s short interest has nearly halved in the last fortnight, while Galaxy has remained just above 70 million.

Despite Pilbara Minerals signing an offtake agreement in the last fortnight it hinted demand could be tempered due to COVID-19. It managed to export nearly 34,000 tonnes of concentrate but this was at the lower end of its previous guidance.

Myer (ASX:MYR) took out third place, behind Pilbara and Galaxy, after closing all its stores for a month.

Around half a dozen oil stocks remained shorted as prices continue to lag.

Another stock on the list is uranium play Paladin Energy (ASX:PDN). While it has had no news in recent days, the uranium industry has witnessed some interesting developments.

Larger producers such as Cameco have had to suspend operations due to government regulations. Consequently uranium prices, which plunged during the GFC and never recovered, are up 12 per cent in the last month.

Botanix Pharmaceuticals (ASX:BOT) failed another clinical trial a fortnight ago and saw its share price plunge.

While many education stocks on the ASX are technology based, so-called ed tech G8 Education (ASX:GEM), which also made this week’s short & caught list, runs physical childcare centres.

The company is currently in a suspension pending an update to shareholders on just how COVID-19 has hit it.