Short & Caught: Pilbara Minerals in the crosshairs as lithium plays targeted

Pilbara Minerals has become the most shorted ASX stock as price of lithium falls from 2022 highs
Flight Centre the second most shorted ASX stock, despite a turnaround in its profits in FY23
AI play Brainchip Holdings booted from S&P ASX 200

How does shorting work?

Short sellers effectively borrow a stock from a broker, and go wager it (sell it) on the open market. The plan is to then buy the same stock back later after it’s made a hefty drop in price. That done, the short seller buys it back at the lower price and returns it to the lender.

The difference between the sell price and the buy price is the short seller’s profit. Investors are in effect betting they will fall.

Because shorting is restricted under Australian law (and because it’s an all or nothing bloodsport) any substantial shorting of stocks is worth knowing about, even if you only trade long.

And perhaps there’s method in the madness.

Stockhead has utilised the number of short positions as a percentage of total shares on issue. The most ASX shorted stocks (excluding CDIs) all have 5% or more.

The most shorted stocks on ASX

Swipe or scroll to reveal full table. Click headings to sort:

Code	Company	Short positions	Shares on issue	% short positions
PLS	PILBARA MIN LTD ORDINARY	316,748,111	3,007,295,489	11%
FLT	FLIGHT CENTRE TRAVEL ORDINARY	21,114,521	218,897,036	10%
SYR	SYRAH RESOURCES ORDINARY	63,881,401	675,897,730	9%
ELD	ELDERS LIMITED ORDINARY	14,188,426	156,476,574	9%
CXO	CORE LITHIUM ORDINARY	168,601,006	2,108,516,794	8%
IEL	IDP EDUCATION LTD ORDINARY	21,442,838	278,336,211	8%
BRN	BRAINCHIP LTD ORDINARY	131,139,608	1,775,058,145	7%
SHV	SELECT HARVESTS ORDINARY	8,883,288	121,058,664	7%
MSB	MESOBLAST LIMITED ORDINARY	58,956,226	814,204,825	7%
APX	APPEN LIMITED ORDINARY	11,197,400	156,921,599	7%
SYA	SAYONA MINING LTD ORDINARY	732,948,171	10,293,296,014	7%
JBH	JB HI-FI LIMITED ORDINARY	7,632,622	109,333,981	7%
ACL	AU CLINICAL LABS ORDINARY	13,906,164	201,834,015	7%
BOQ	BANK OF QUEENSLAND. ORDINARY	45,256,322	657,217,431	7%
LLC	LENDLEASE GROUP FPO/UNITS STAPLED	47,446,859	689,322,065	7%
HVN	HARVEY NORMAN ORDINARY	80,524,479	1,246,006,654	6%
DMP	DOMINO PIZZA ENTERPR ORDINARY	5,715,335	89,096,496	6%
OBL	OMNI BRIDGEWAY LTD ORD US PROHIBITED	17,909,462	280,471,167	6%
ZIP	ZIP CO LTD ORDINARY	53,795,000	852,752,526	6%
ARB	ARB CORPORATION. ORDINARY	4,867,341	82,099,299	6%
TPW	TEMPLE & WEBSTER LTD ORDINARY	7,244,552	122,949,702	6%
TIE	TIETTO MINERALS ORDINARY	63,660,925	1,087,527,490	6%
ARU	ARAFURA RARE EARTHS ORDINARY	122,965,960	2,113,364,692	6%
LKE	LAKE RESOURCES ORDINARY	82,200,495	1,422,444,707	6%
LIC	LIFESTYLE COMMUNIT. ORDINARY	5,964,090	104,545,131	6%
VUL	VULCAN ENERGY ORDINARY	9,007,870	168,335,301	5%
CCP	CREDIT CORP GROUP ORDINARY	3,599,802	68,066,856	5%
BBN	BABY BUNTING GRP LTD ORDINARY	7,108,349	134,906,489	5%
LYC	LYNAS RARE EARTHS ORDINARY	48,621,371	933,815,477	5%
IFL	INSIGNIA FINANCIAL ORDINARY	34,397,833	662,598,242	5%
BRG	BREVILLE GROUP LTD ORDINARY	7,367,250	143,425,348	5%
WBT	WEEBIT NANO LTD ORDINARY	9,213,799	187,481,064	5%
IMU	IMUGENE LIMITED ORDINARY	331,496,949	6,834,259,350	5%
29M	29METALSLIMITED ORDINARY	31,583,755	659,518,854	5%
A2M	THE A2 MILK COMPANY ORDINARY	34,428,178	722,934,808	5%
AMA	AMA GROUP LIMITED ORDINARY	50,974,425	1,073,070,217	5%
CHN	CHALICE MINING LTD ORDINARY	18,353,288	388,963,304	5%
BET	BETMAKERS TECH GROUP ORDINARY	43,538,727	943,541,600	5%

Pilbara Minerals most shorted ASX stock

Pilbara Minerals (ASX:PLS) has become the most shorted stock on the ASX. Its short position is 11% as short sellers also target other lithium stocks including Core Lithium (ASX:CXO), Sayona Mining (ASX:SYA), and Lake Resources (ASX:LKE).

Short sellers seem concerned lithium prices could fall in the coming years with forecasts of surplus of the battery mineral as more lithium mines globally come into production.

As Stockhead’s Josh Chiat noted last year, lithium stocks banked incredible margins as prices charged to unforeseen levels as a shortage of supply ran up against a 50% rise in electric vehicle sales.

Prices ran up to over US$80,000/t in China for downstream chemicals and US$8000/t for spodumene concentrate.

But they’ve since fallen to about US$30,000/t and US$3500/t respectively, still portending extraordinary margins for producers like PLS, which had $3.3 billion of cash sitting in its bank account at June 30 after a record year of volume and prices at its Pilgangoora mine in FY23.

However, with signs of China’s economy faltering and its EV demand moderating, there are concerns about a drop off in lithium prices.

Syrah Resources – (ASX:SYR) has also been targeted by short sellers. Weak graphite prices have been having a negative impact on SYR’s performance, with its share price down more than 70% YTD.

The PLS, CXO, SYA, LKE & SYR share price today:

Flight Centre remains second most shorted stock on ASX

After hitting turbulence with short sellers for much of 2022 and 2023 as the ASX’s most shorted stock, Flight Centre (ASX:FLT) is still holding second place, where it has sat since August.

FLT reported a big turnaround in its profits in FY23, citing a strong recovery in the travel sector from the Covid-19 pandemic and improved trading conditions during the year.

The company had an increase of 112% in total transaction value (TTV) growth to $22 billion – its second strongest result achieved on record.

IDP Education (ASX:IEL) is also still one of the most shorted stocks on the ASX despite releasing a strong FY23 result including record revenue of $982 million, up 24% on FY22. IEL specialises in international student placement services and high-stakes English language testing.

The company says the strong revenue results were driven by student placement revenue growth of 63% on FY22.

Tech and AI play BrainChip Holdings (ASX:BRN) is also on the list of most shorted ASX stocks. BRN is involved in neuromorphic computing, which is a type of AI that simulates the functionality of the human neuron and is working on commercialisation of its Akida chip.

The company was removed from the S&P ASX 200 in the September rebalance just 15 months after being admitted in June 2022, with its share price falling more than 60% YTD.

BRN reported its H1 FY23 recently including revenue of just US$115,606, down 98% from $4.8 million on pcp. Total expenses were up 30% to US$16.85 million.

The FLT, IDP and BRN share price today:

Domino’s out of flavour with short sellers

Domino’s Pizza (ASX:DMP) is out of favour – or should we say ‘flavour’ – with short sellers. CEO Don Meiji’s came under fire recently for trying to offset some inflation-fuelled rising costs by passing the cost onto deliveries.

That just stopped people ordering, moving DMP from a consumer staple to a consumer discretionary.

Costs rose, FY23 net profit performed a 74% cliff dive and punters had to live with reduced dividend. To get back on track DMP announced mass job cuts in August which the market reacted to favourably. The DMP share price is up ~5.67% in the past month.

Cost of living pressures inflation and higher interest rate hikes has also seen several ASX consumer discretionary stocks remain on the short sellers’ list including JB HiFi (ASX:JBH), Temple & Webster (ASX:TPW), Harvey Norman Holdings (ASX:HVN), and Baby Bunting (ASX:BBN).

Fintechs Zip Co (ASX:ZIP) and EML Payments (ASX:EML) also remain on the watchlists of short sellers along with some biotechs including Mesoblast (ASX:MSB) and Australian Clinical Labs (ASX:ACL).