Short & Caught: The ASX has a new most shorted stock as Betmakers gallops past Flight Centre
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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 ASX shorted stocks all have 5% or more.
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Adversely affected by the Covid-19 pandemic, FLT and the travel sector have been recovering as Australia’s borders started to re-open both domestically and internationally.
The FLT share price has been lifting since the start of October and is up more than 13%, catching a rebound in travel stocks which was helped by Qantas (ASX:QAN).
Australia’s Flying Kangaroo said demand was strong and forecasted underlying profit before tax of between $1.2bn – $1.3bn in the H1 FY23, almost as much as the market was assuming they would make for the full year.
While still in the number two position with a substantial number of FLT’s shares being used to bet against it, the trophy for most shorted stock heading onto the ASX has been passed to Betmakers (ASX:BET).
BET operates a platform model providing the back-end technology for bookmakers primarily in horse racing. It recently released its Q1 FY23 results including $23.8m in cash receipts for the quarter, which is +13% versus the pcp.
The BET short position has jumped from 14% in October. Its share price has dropped more than 24% in the past month and it seems short sellers think it may keep going down.
Short sellers may be disappointed to see the share price of BNPL play Block Inc (ASX:SQ2) rally ~10% in the past month.
SQ2 is the third most shorted ASX stock with its short position remaining flat at 12% as we head into November.
The share price rally follows SQ2 reporting a 17% increase in total revenue for the September quarter to $4.5 million.
Subscription and services-based revenue for the three and nine months ended September 30, 2022 increased by $496.7 million, or 71% and $1.3 billion, or 68%, compared to the three and nine months ended September 30, 2021, respectively.
SQ2 said the increase was driven by revenue generated from the BNPL platform following the acquisition of Afterpay in the first quarter of 2022.
Emerging lithium producer Sayona Mining (ASX:SYA) has entered the top 10 of the most shorted stocks on the ASX.
SYA has seen its short position increase to 9% from 8% last month. SYA recently announced it had further advanced the restart of production at its North American Lithium (NAL) operation with permitting applications and procurement both 96% complete.
NAL’s restart is on track for Q1 2023, amid the intense growing demand for lithium.
Still on lithium and Core Lithium (ASX:CXO) has found itself in the top 50 with its short position at 5%. CXO recently announced that its proposed deal to supply spodumene from its new Finniss mine in the Northern Territory to Elon Musk’s Tesla has fallen through.
Despite the news, the CXO share price has continued to rise and is up 32% in the past month.
And lithium developer Lake Resources (ASX:LKE) has seen its short position improve from 10% to 8%.
LKE has recently announced it had completed the construction of its Kachi project lithium processing demonstration plant.
The company said the wet and dry commissioning process took place during September and October.
The LKE share price has risen more than 11% in the past month.
Infection prevention company and Morgans senior analyst Scott Power’s most recent stock of the week Nanosonics (ASX:NAN) has seen its short position increase to 9%.
NAN has been a target of short sellers throughout 2022 with the company changing its business model in the key US market.
However, Morgans have upgraded the stock from a Hold to an Add and slightly increased their 12-month target price to $4.91.
NAN has its AGM on November 18 and Morgans expects management to reconfirm strong guidance provided at the FY22 results in August.
The Nanosonics share price has rallied 23% in the past month.