With two weeks to go until the end of financial year, it would seem the only people thinking about stocks going down are those seeking to offset capital gains.

But in Short & Caught, Stockhead reveals which stocks traders are predicting will fall and they intend to profit from. Traders do this by “selling” stock they do not actually own in hope of buying it back at a lower price.

Considering the restrictions surrounding shorting, any substantial shorting of stocks is worth knowing about even if you own these stocks and only trade “long” – conventional buying what you don’t known and selling what you do.

Short interest

Short interest is Stockhead’s preferred way to measure shorted stocks. The selling has occurred but the buying has not. While there is no way to tell why investors are betting against the stock, you can tell they are.

This fortnight, Stockhead has found 16 stocks with short interest above $10 million. The most heavily shorted small cap is retailer Myer (ASX: MYR) with $66 million in short interest.

Myer has witnessed a long decline from its 2014 high of $1.90 as shoppers shunned brick and mortar stores. But in recent months it rallied from its all time low of 37 cents and is now at 60 cents.

Short traders evidently do not think this will last in absence of a change in strategy that embraces e-shopping despite repeated warnings – most recently last week from Deloitte.

Syrah Resources (ASX: SYR) and Senex Energy (ASX: SXY) were on Stockhead’s list last week and have remained here – although Senex’s short interest has fallen by $20 million in two weeks while Syrah remained unchanged.

Another decliner was FAR (ASX: FAR) which had $95 million in short interest but now has only $20 million. One new entrant was iron ore miner Grange Resources (ASX: GRR) with $10 million.

Code Name Price Market Cap Short Interest
MYR MYER HOLDINGS LTD 0.60 $488.7M 66122328
SYR SYRAH RESOURCES LTD 1.04 $358.3M 56191240
SXY SENEX ENERGY LTD 0.28 $399.6M 51305172
CLQ CLEAN TEQ HOLDINGS LTD 0.30 $233.6M 38130304
MRM MMA OFFSHORE LTD 0.17 $150.2M 31496100
AJM ALTURA MINING LTD 0.10 $223.2M 26371692
LNG LIQUEFIED NATURAL GAS LTD 0.26 $148.7M 26003616
MLX METALS X LTD 0.24 $165.2M 22029740
FAR FAR LTD 0.06 $376.8M 20209648
INR IONEER LTD 0.16 $236.0M 18221492
SEA SUNDANCE ENERGY AUSTRALIA LTD 0.23 $158.1M 15970007
EWC ENERGY WORLD CORP LTD 0.069 $123.9M 15767859
ECX ECLIPX GROUP LTD 1.355 $433.1M 12674655
BWX BWX LTD 2.12 $263.4M 12344329
NCZ NEW CENTURY RESOURCES LTD 0.625 $316.1M 10948290
GRR GRANGE RESOURCES LTD 0.275 $318.3M 10249047

 

Short interest as % of free float

Another way to take the literal short interest figure and measure it as a percentage of free float – that is, stocks not restricted such as escrowed shares or directors shares amidst a period where trading is restricted.

This fortnight Stockhead only noticed eight small caps with a short interest figure above 5 per cent and four above 10 per cent.

The four stocks over 10 per cent were Syrah Resources (ASX: SYH) with 16.77 per cent; Kogan (ASX: KGN) with 14.89 per cent; BWX (ASX: BWX) with 12.19 per cent and Wagners (ASX: WAG) with 11.11 per cent.

Of these stocks, only Kogan is a new entry on the list. Since mid-January it is up 64 per cent from $3.10 per share to $5.11. But it has begun to fall in recent days and investors are betting this will continue.

Code Name Price SI % Eqty Flt Market Cap
SYR SYRAH RESOURCES LTD 1.04 16.8 $358.3m
KGN KOGAN.COM LTD 5.1 14.9 $478.0m
BWX BWX LTD 2.11 12.2 $263.4m
WGN WAGNERS HOLDING CO LTD 1.88 11.1 $304.2m
MYR MYER HOLDINGS LTD 0.6 9.3 $488.7m
CLQ CLEAN TEQ HOLDINGS LTD 0.3 8.2 $223.9m
CLH COLLECTION HOUSE LTD 1.26 6 $175.5m
MRM MMA OFFSHORE LTD 0.175 5.1 $150.2m