Short & Caught: Popular lithium plays among most shorted ASX stocks
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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% or more.
After remaining the most shorted ASX stock on the ASX in FY22, Flight Centre (ASX:FLT) is still having a turbulent flight with short sellers in the first quarter of FY23.
FLT remains the most shorted stock on the ASX but its short position is continuing to slightly improve. FLT recently reported its FY22 results, flagging a $183.1m underlying EBITDA loss – a 46% improvement on the $337.8 million FY21 result.
The FLT share price is down more than 8% year to date.
The second most shorted stock on the ASX is wagering tech company Betmakers Technology Group (ASX:BET) with its short position up from ~12% in August. Betmakers recently reported a 371% increase in revenue in FY22 to $97.1m compared to FY21. Bottom line adjusted EBITDA was $2.2m, a $3m decline from FY21.
Online sports betting company Pointsbet (ASX:PBH) has also seen its short position increase from 6.30% in August. Pointsbet posted a 52% jump in revenue but its EBITDA losses deepened to ~$243.6 million. The company intends to continue growing in the US in the current financial year
The PBH share price is down ~66% year to date.
Short sellers are also looking at lithium and and gold stocks. De Grey Mining (ASX:DEG) has seen its short positioned increased from 5.87% in August, despite as Stockhead’s Josh Chiat pointing out its Hemi find in WA’s Pilbara gold fields is tipped to live up to the early hype.
The gold producer recently announced its Hemi project as a future Top 5 gold mine with PFS outlining plans to produce 550,000oz of gold a year.
Popular traded stock on online trading platform Stake Lake Resources (ASX:LKE) along with near-term producer Core Lithium (ASX:CXO) also remain on the short sellers list, although their positions have fallen from last month.
Core Lithium has ‘mutually’ agreed to extend the termination date for its binding offtake term sheet with Tesla to October 26.
The company’s share price is up more than 165% year to date.
It’s been a tough year for BNPL stocks and while the short position of Block Inc (ASX:SQ2) is on the improve from 11.47% in August, short sellers have increased the position of Zip Co (ASX:ZIP) from 8.30% in August.
Short traders are continuing to bet that pandemic-era sharemarket darlings will feel the heat of surging inflation, rising interest rates and falling household wealth on their earnings.
Among consumer discretionary stocks on the hit list of short sellers are City Chic Collective (ASX:CCX), Kogan (ASX:KGN), Temple & Webster (ASX:TPW) and Redbubble (ASX:RBL), who all saw their short positions increased this month.
Redbubble reported a difficult FY22 with profits turning to loss. The e-commerce marketplace for artists reported EBITDA loss of $11.2 million, down from $52.7 million profit last year. NPAT loss was $24.6 million, compared to a profit of $31.2 million in FY21.
The Redbubble share price is down 75% year to date.
Disclosure: The author held shares in Regis Resources at the time of writing this article.