Short & Caught: Pilbara Minerals is the ASX's most shorted as lithium prices tumble

Pilbara Minerals now most shorted ASX stock as price of lithium falls from 2022 highs
Raleigh Finlayson’s ~$2 billion market capped gold miner Genesis Minerals also on list
Memory chip maker has 8% of its stock shorted, despite announcing maiden revenue

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	568,146,773	3,009,462,660	19%
SYR	SYRAH RESOURCES ORDINARY	114,959,635	675,897,730	17%
CXO	CORE LITHIUM ORDINARY	230,951,309	2,136,935,544	11%
GMD	GENESIS MINERALS ORDINARY	110,654,687	1,079,887,829	10%
SYA	SAYONA MINING LTD ORDINARY	1,006,091,247	10,293,296,014	10%
APX	APPEN LIMITED ORDINARY	15,129,014	156,921,599	10%
IEL	IDP EDUCATION LTD ORDINARY	26,157,449	278,336,211	9%
FLT	FLIGHT CENTRE TRAVEL ORDINARY	20,067,872	219,463,435	9%
BOQ	BANK OF QUEENSLAND. ORDINARY	54,637,995	659,684,732	8%
WBT	WEEBIT NANO LTD ORDINARY	14,244,451	187,854,564	8%
OBL	OMNI BRIDGEWAY LTD ORD US PROHIBITED	20,982,021	280,471,167	7%
LLC	LENDLEASE GROUP FPO/UNITS STAPLED	51,084,212	689,632,247	7%
SHV	SELECT HARVESTS ORDINARY	8,782,190	121,058,664	7%
LTR	LIONTOWN RESOURCES ORDINARY	172,358,385	2,406,408,810	7%
ARU	ARAFURA RARE EARTHS ORDINARY	149,099,711	2,113,364,692	7%
IMU	IMUGENE LIMITED ORDINARY	498,692,950	7,164,974,859	7%
MSB	MESOBLAST LIMITED ORDINARY	56,109,777	814,204,825	7%
HVN	HARVEY NORMAN ORDINARY	82,264,155	1,246,006,654	7%
PEN	PENINSULA ENERGY LTD ORDINARY	80,384,828	1,257,798,186	6%
ACL	AUSTRALIAN CLINICAL LABS ORDINARY	12,487,552	201,834,015	6%
AGY	ARGOSY MINERALS LTD ORDINARY	83,035,172	1,404,407,498	6%
IFL	INSIGNIA FINANCIAL ORDINARY	38,979,323	666,626,753	6%
JBH	JB HI-FI LIMITED ORDINARY	6,371,252	109,333,981	6%
LIC	LIFESTYLE COMMUNITIES. ORDINARY	6,083,467	104,545,131	6%
CHN	CHALICE MINING LTD ORDINARY	22,605,563	388,963,304	6%
INR	IONEER LTD ORDINARY	119,637,321	2,111,412,147	6%
NEC	NINE ENTERTAINMENT ORDINARY	90,486,170	1,626,270,594	6%
LYC	LYNAS RARE EARTHS ORDINARY	51,177,922	934,694,336	5%
ELD	ELDERS LIMITED ORDINARY	8,544,821	156,476,574	5%
SLX	SILEX SYSTEMS ORDINARY	12,712,630	235,946,075	5%
STX	STRIKE ENERGY LTD ORDINARY	134,219,484	2,539,297,384	5%
TPW	TEMPLE & WEBSTER LTD ORDINARY	6,279,386	122,949,702	5%
BRN	BRAINCHIP LTD ORDINARY	90,769,372	1,790,058,145	5%
VUL	VULCAN ENERGY ORDINARY	8,178,464	168,335,301	5%
NVX	NOVONIX LIMITED ORDINARY	22,505,112	488,617,720	5%
BRG	BREVILLE GROUP LTD ORDINARY	6,574,197	143,425,348	5%
DYL	DEEP YELLOW LIMITED ORDINARY	34,543,388	758,418,967	5%
DMP	DOMINO PIZZA ENTERPR ORDINARY	4,025,308	89,811,993	4%
SUL	SUPER RETAIL ORDINARY	10,115,440	225,826,500	4%
WEB	WEBJET LIMITED ORDINARY	17,099,652	385,982,154	4%
ARB	ARB CORPORATION. ORDINARY	3,621,156	82,220,441	4%
SFR	SANDFIRE RESOURCES ORDINARY	20,091,057	456,992,404	4%
PNV	POLYNOVO LIMITED ORDINARY	29,814,981	690,232,751	4%
PDN	PALADIN ENERGY LTD ORDINARY	128,181,434	2,983,375,533	4%
BLD	BORAL LIMITED. ORDINARY	47,143,135	1,103,088,419	4%
CUV	CLINUVEL PHARMACEUT. ORDINARY	2,097,023	49,410,338	4%
MIN	MINERAL RESOURCES. ORDINARY	8,109,251	195,186,428	4%
SGM	SIMS LIMITED ORDINARY	7,964,608	193,209,667	4%
NMT	NEOMETALS LTD ORDINARY	22,683,453	553,307,937	4%
ZIP	ZIP CO LTD.. ORDINARY	36,779,639	903,086,366	4%
A2M	THE A2 MILK COMPANY ORDINARY	29,184,147	722,934,808	4%
CXL	CALIX LIMITED ORDINARY	7,267,268	181,363,326	4%
DOW	DOWNER EDI LIMITED ORDINARY	25,979,485	671,573,679	4%
PPT	PERPETUAL LIMITED ORDINARY	4,243,110	113,334,546	4%
NIC	NICKEL INDUSTRIES ORDINARY	158,753,730	4,285,809,880	4%
IGO	IGO LIMITED ORDINARY	27,048,395	757,267,813	4%
BGL	BELLEVUE GOLD LTD ORDINARY	40,648,604	1,149,005,566	4%
BGA	BEGA CHEESE LTD ORDINARY	10,692,614	304,517,775	4%

Pilbara Minerals becomes most shorted stock

In a sign of just how much falling lithium prices are weighing on ASX lithium stocks in 2023 Pilbara Minerals (ASX:PLS) has become the most shorted stock on the Aussie bourse.

The ASX 200 lithium company currently has 19% of its stock currently shorted.

Seneca investment analyst Ben Richards told Stockhead PLS is being targeted by short sellers as a pureplay exposure to falling lithium chemical prices.

“Given that PLS is the largest, most liquid pureplay producer, it is the cleanest way for hedge funds to get borrow on the stock in large size and bet against the lithium price,” he says.

“Lithium prices have been falling in 2023, coming off elevated heights due to softer than expected EV demand and destocking of Chinese inventories.

“While commodity prices tend to overshoot to both the upside and the downside, lithium carbonate prices have breached levels where we expect to see cost curve support in the long run, with low quality lepidolites producing at costs of ~US$25,000/t lithium carbonate. ”

Richards says given the cost curve support, there are opportunities arising in the lithium sector if you believe that EV penetration will continue to rapidly grow and if lithium-ion batteries remain the dominant battery chemistry.

Furthermore Richards says PLS also has a capex program ahead to expand production from ~620ktpa to 1,000ktpa, which is expected to lead to negative free cashflow in FY24.

However, Richards says PLS can internally fund the program with ~$3 billion cash on the balance sheet and no debt.

“Shorting PLS at these prices is a risky bet, given that almost 20% of the register is now sold short,” he says.

“By our calculations, 568 million shares are currently short sold (on a 4-day lag), and with an average daily turnover of ~30 million shares traded per day, that’s about 19 full trading days required to cover the outstanding shorts.

“If lithium prices do turn and spike higher, we could see a short squeeze in PLS shares.”

The PLS share price is down 5.47% YTD and ~10% in the past month.

PLS is not the only lithium stock targeted by short sellers. Core Lithium (ASX:CXO), Syrah Resources (ASX:SYR), Sayona Mining (ASX:SYA), and Liontown Resources (ASX:LTR) are also on the list of the most ASX shorted stocks.

Raleigh Finlayson’s ~$2 billion market capped gold miner Genesis Minerals (ASX:GMD) is also on the list of short sellers.

GMD in June completed the acquisition of the Leonora assets of St Barbara (ASX:SBM) with chairman Anthony Kiernan telling its recent AGM the company’s strategy and aim is “building a premium Australian gold business with sustainable, high quality, +300,000 ounces per annum production”.

GMD recently put together an off-market takeover bid for the remaining DCN shares it didn’t already own.

“We are now progressing to 100% ownership of Dacian,” Kiernan said in his address.

“Dacian’s Mt Morgans mill is an integral part of Genesis’ future.”

The GMD share price is up more than 26% in the past month and 47% YTD.

The PLS, CXO, SYA, LTR, SYR, GMD share price today:

Smooth flying for Flight Centre? Not quite

Flight Centre (ASX:FLT) is finally catching a break with short sellers as the the travel stock, which has been the most shorted stock on the ASX for much of 2022 and 2023, sees its position improve.

FLT’s short position has dropped down to 9% so it’s not completely enjoying a turbulent-free flight with short sellers, but it is an improvement from higher positions.

The FLT share price has risen more than 40% YTD as the company said it is continuing to recover from Covid-19 travel disruptions.

At its AGM in mid-November founder Graham ‘Skroo’ Turner said FLT had a strong start to FY24 with Q1 TTV increasing about 20% or more than $900 million on pcp to $6 billion, just below the record of ~$6.2 billion four years ago.

“In terms of FY24 guidance, we currently expect underlying PBT between $270 million and $310 million,” Turner said.

“The mid-point – $290 million – represents almost 175% growth on FY23 and is broadly in line with current market consensus.”

Short sellers target IDP Education

IDP Education (ASX:IEL), which specialises in international student placement services and high-stakes English language testing, is also a target of short sellers.

IEL also operates English language schools in Southeast Asia and organises educational events and conferences across the globe.

At its AGM chairman Peter Polson said FY23 was “a very successful one” for the company. IEL achieved record revenue of $982 million, a 24% increase on FY22, driven primarily by its student placement business.

The company recorded $228 million in adjusted earnings before interest and tax, a 40% increase from FY22.

“Our adjusted net profit after tax reached $154 million, a new company record, and 45% higher than FY22,” Polson said.

“In fact, it was a record year across all of our key operational and financial metrics.”

The IEL share price is down ~16% YTD but up more than 5% in the past month.

Short sellers not seeing upside in Weebit Nano

Memory chip maker Weebit Nano (ASX:WBT) has 8% of its stock shorted, despite announcing it has just earned maiden revenue, a key milestone for a tech company.

In early November WBT announced its first IP licensing revenue of US$100k for its embedded Resistive Random-Access Memory (ReRAM) technology.

WBT considers the fact that Weebit Nano is no longer “pre-revenue” to be material, as it marks the company’s transition to commercialisation phase.

READ: Weebit Nano wins the ASX semiconductor race to revenue, partners with Tier-1 foundries

The FLT, IEL & WBT share price today:

Retail and medical stocks also shorted

Several consumer discretionary stocks which could take the toll of higher interest rate rises and cost of living also continue to be targeted by short-sellers including JB HiFi (ASX:JBH), Harvey Norman Holdings (ASX:HVN),Domino’s Pizza Enterprises (ASX:DMP), Super Retail Group (ASX:SUL) and Temple & Webster (ASX:TPW).

Short sellers also are betting against health stocks including cancer fighter Imugene (ASX:IMU), Mesoblast (ASX:MSB) and Australian Clinical Labs (ASX:ACL).

MSB recently announced that the Blood and Marrow Transplant Clinical Trials Network (BMT CTN) has entered into a deal to develop a pivotal trial of its lead product candidate Ryoncil (remestemcel-L) in treatment of adults with steroid-refractory acute graft versus host disease (SR-aGvHD).