Short & Caught: The ASX stocks 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 that 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’.

Stockhead’s two preferred metrics are raw short interest as well as percentage changes in them within the last month.

Most shorted

Four stocks have more than $65 million in short interest accrued and these are all resources stocks.

Heading the list is lithium miner Galaxy Resources (ASX:GXY). Galaxy is followed by graphite miner Syrah Resources (ASX:SYR) as well as petroleum plays Far (ASX:FAR) and Senex Energy (ASX:SXY).

Galaxy and Syrah have been affected by the lull in the lithium and graphite markets for several months.

In recent days, Far and Senex have seen oil prices briefly spiking due to US-Iran tensions, but they are still 14 per cent lower than a month ago.

Companies lower on the list of most shorted stocks have made sharp climbs too. Emerald Resources (ASX:EMR) has 8.2 million shorted shares, up 92 per cent in the last month. The Cambodian focused gold explorer spent most of January undertaking a $75 million capital raise.

Also making climbs are drilling rig provider Mitchell Services (ASX:MSV) and home building robot maker FBR (ASX:FBR).

Newly shorted

Another infrastructure play Decmil Group (ASX:DCG) has also become a new target of shorters – to the tune of 800,000 shares.

It has not recovered since a pre-Christmas market update sent it crashing 33 per cent in a day.

Also on the list are a number of China focused stocks including infant formula plays Clover Corp (ASX:CLV), HRL Holdings (ASX:HRL) and cattle exporter Wellard (ASX:WLD).

While markets welcomed the Phase I trade deal between America and China, these stocks may be hurt if China lives up to its promise to buy more goods from the US.

Many China-focused stocks suffered a further blow this morning as investors feared the Wuhan Coronavirus could hurt tourism and food exports.

Also shorted was Sezzle (ASX:SZL) after a hiccup in getting a lending license in California which it eventually overcame.

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