In Short & Caught, Stockhead recaps the most shorted ASX stocks and in this edition many of them are previous market darlings.
How does shorting work?
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 | % of Shorts | Weekly Movement % | Monthly Movement % |
|---|---|---|---|---|---|
| FLT | Flight Centre | 20,711,539 | 10.39% | 16.27% | 15.86% |
| KGN | Kogan | 10,637,550 | 10.00% | 10.32% | 135.40% |
| RSG | Resolute Mining | 108,008,106 | 9.78% | 3.71% | 12.56% |
| TGR | Tassal | 20,447,543 | 9.63% | 0.42% | -2.35% |
| TPW | Temple & Webster | 11,285,447 | 9.37% | -0.12% | 53.82% |
| WEB | Webjet | 32,789,874 | 8.66% | 3.43% | -30.73% |
| ING | Inghams | 29,573,998 | 7.96% | -0.88% | -4.64% |
| MP1 | Megaport | 12,407,260 | 7.93% | 1.98% | 26.47% |
| Z1P | Zip | 40,219,013 | 7.25% | 5.43% | 51.25% |
| MTS | Metcash | 73,016,133 | 7.14% | -1.90% | -2.87% |
Targets for shorting
While Australians are travelling domestically, the return of international holidays and tourists coming here appears a long way off – the Morrison government is now assuming borders will be closed until mid-2022.
Flight Centre (ASX:FLT) and Webjet (ASX:WEB) among other travel stocks have taken a tumble, both companies are down over 20 per cent in two months and are among the top 20 shorted stocks.
Another sector that has had a rough year is the tech sector, particularly buy now pay later and ecommerce sectors.
Even though many companies such as Kogan (ASX:KGN) and Zip (ASX:Z1P) have continued to report solid revenue growth, investors have heavily sold off these stocks and their industry peers from their all-time highs.
Another two companies on the list of stocks ASX investors are shorting are Bevan Slattery founded cloud service provider Megaport (ASX:MP1) and furniture outlet Temple & Webster (ASX:TPW).
Both companies gained early in the pandemic as Australian consumers were forced to work and socialise from their own homes and some chose the chance to work on home projects.
But now as Australians have ventured out again, both have retreated from their all-time highs and seen high levels of shorting, even though they remain above their pre-pandemic highs.