Short & Caught: The ASX small caps investors are shorting right now

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Short & Caught is Stockhead’s fortnightly recap of which ASX small cap stocks are heavily shorted. Stocks that are shorted have investors betting they fall.

Shorting works by selling stocks you do not actually own in the hope of buying them back at a lower price.

Because shorting is restricted under Australian law, any substantial shorting of stocks is worth knowing about, even if you own these stocks and only trade long.

The heavily shorted stocks

Shares in lending fintech Wisr (ASX:WZR) slid over 75 per cent in just six weeks when COVID-19 first broke out, but have been well on the way up since then.

At the end of last month, the company told shareholders it had seen solid growth in lending despite COVID-19 and subsequently adopting a tighter credit policy. But how Victoria’s second wave will affect ASX small caps remains to be seen.

Other tech stocks which have attracted shorters’ attention in recent weeks include buy now, pay later stock Openpay (ASX:OPY) and fellow fintech lender MoneyMe (ASX:MME). 

Again, both stocks have told shareholders in recent weeks they have performed well despite COVID-19.

Singapore-focused telco Tuas (ASX:TUA) is another heavily shorted stock. The company was spun out of TPG just prior to its merger with Vodafone.

Despite gold hitting $US2,000 ($2793) per ounce last week and almost all stocks seeing gains in 2020, a handful of stocks saw increased short interest volumes.

One is Titan Minerals (ASX:TTM), which is one of the few explorers with exposure to Ecuador, and another is producer Dacian Gold (ASX:DCN). 

The latter has been one of the few disappointments in the gold sector in 2020, falling 75 per cent. Dacian has taken a hit over production downgrades and a heavily discounted capital raising.

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