Short and Caught: The ASX stocks investors are shorting right now
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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.
Because short interest represents short trades that have been made but not closed out, you may see short interest decline when a company falls.
This happened with Botanix Pharmaceuticals (ASX:BOT) which has 12 million shares shorted — 26 per cent lower than a month ago.
A disappointing clinical trial led to its shares halving, presenting an ideal opportunity for shorters to close out their trades.
Graphite miner Syrah Resources (ASX:SYR) has 73.3 million shares shorted — 9 per cent higher than a month ago.
Lithium miner Galaxy Resources (ASX:GXY) is not far behind with 68 million, but this has only grown 3 per cent in the last month.
Among non-resources companies with short interest over 5 million included retailer Myer (ASX:MYR) and satellite play Speedcast (ASX:SDA).
Moving up the list is Internet of things (IoT) Buddy Technologies (ASX:BUD), house building robot maker FBR (ASX:FBR) and West African Resources (ASX:WAF).
Topping the list of newly shorted stocks was takeover target CSG (ASX:CSV). Fuji Xerox wants to buy the IT services company for $140m.
Also newly shorted was Cash Converters (ASX:CCV), which a fortnight ago finally settled its three-year long legal battle against customers which alleged they were charged excessive interest rates. Shareholders saw a long gradual decline but a rally occurred when the case was settled.
After months of battling for Xenith IP (ASX:XIP), Qantm Intellectual Property (ASX:QIP) gave up the chase to IPH in April. The stock rallied over winter but has begun to decline in spring.
One catalyst could be the retirement of CEO Leon Allen (who has been with the company since its listing), who will be replaced in January by Craig Dower — the past CEO of Xenith.