Key takeaways:

• Debate over the lithium price outlook fuels short interest in battery metals stocks

• Gold producers are one of the winners in December as precious metals rally 

Some of the market most heavily-shorted stocks have been dealt a reprieve after short sellers adjusted their sights to a new set of targets. Gold stocks were aided by rising prices for the precious metal, however, short interest rose in lithium stocks amid concerns about the commodity price outlook.

Selfwealth does not offer short selling. Please note, data below is for information purposes and insights about sentiment, sourced from ASIC with a T+4 (4 trading day) delay. Individual short sellers report their short positions, so data is based on third-party input. There can be no guarantees regarding the accuracy of the data, and it should not be used as the basis for financial decisions.

Most Shorted ASX Stocks

1. Flight Centre (ASX: FLT)

After a disappointing share price performance throughout November, when the rest of the market rallied, short sellers have maintained the pressure on one of their favourite targets this year in Flight Centre. FLT is again the most shorted stock on the ASX, with 14.6% of all securities on issue currently sold short. One of the key issues may be the sector recovery, with onlookers waiting for Chinese tourism to restart down under.

2. BetMakers Technology (ASX: BET)

Compared with a month ago, short interest in betting technology firm BetMakers is down 210 basis points to 13.1%. Earlier this month, the company was caught up in a probe by the ASX when the market operator questioned a payment made by Betmakers to one of its key shareholders and betting industry entrepreneur Matthew Tripp, who is also a major backer in industry peer Betr.

3. Perpetual (ASX: PPT)

Weaker market conditions throughout December have seen the level of short interest in fund manager Perpetual hit an all-time high. Approximately 12.7% of all shares on issue are currently sold short, with the company acquisition of Pendal enticing arbitrage funds to ramp up their short activity. At one stage it looked as though Perpetual might be forging ahead with its own takeover offer, but management recommitted to the deal with Pendal.  

4. Megaport (ASX: MP1)

Short interest in Megaport has risen throughout December, almost clawing back the full reduction made across the prior month. The stock has been one of the key barometers for sentiment across the local tech sector in 2022. Shares in Megaport end the year approximately two-thirds below where they started, and with the Nasdaq looking shaky, lofty valuations remain a focal point. 

5. Sayona Mining (ASX: SYA)

One of a number of battery metals stocks that saw a rise in short interest over recent weeks, Sayona Mining has largely become a target due to its rise to fame. Valuations across the sector reached elevated levels in anticipation of a strong outlook, however, some brokers have recently begun to cast doubt over the medium-term outlook for lithium carbonate prices. It appears those questions have prompted a rethink for shorters, with short interest also building against Core Lithium.

RankCompany

% Securities Reported as Sold Short

Dec, 2022

Monthly Change

1Flight Centre (ASX: FLT)

14.6%

-0.1

2BetMakers Tech (ASX: BET)

13.1%

-2.1

3Perpetual (ASX: PPT)

12.7%

+3.3

4Megaport (ASX: MP1)

11.3%

+0.9

5Sayona Mining (ASX: SYA)

10.1%

+0.5

6Zip Co (ASX: ZIP)

8.1%

+0.3

7Core Lithium (ASX: CXO)

8.0%

+3.4

8Breville Group (ASX: BRG)

7.9%

-0.5

9Lake Resources (ASX: LKE)

7.8%

-0.5

10Chalice Mining (ASX: CHN)

7.2%

+2.0

*Data is T+4, based on information reported to ASIC for December 21, 2022; rounded to one decimal

Major Movers

1. Block (ASX: SQ2)

There has been a sharp decrease in short activity in Afterpay owner Block throughout December. Although the stock remains exposed to the gyrations of the tech sector, it appears as though one major short seller closed out their position at the start of December, just a day after Block posted a rally of 7.4% in a single trading session. As it stands, short interest in Block has decreased from 12.5% a month ago to just 2.3% at the time of this report.

2. Domino Pizza (ASX: DMP)

The new month also brought about a big fall in short interest for pizza franchise operator Domino, which has faced inflationary challenges across the course of the year. Shares in Domino hit a three-month high at the end of November, and it looks like that was enough for some short sellers to close their positions amid the risk that their losses could have been compounded if Domino shares kept rallying.

3. St Barbara (ASX: SBM)

With gold prices moving higher over recent weeks, several gold producers are now sporting a reduced level of short interest. In the case of St Barbara, short interest in the stock accounts for 3.9% of all securities on issue, whereas a month ago this was sitting at 8.3%. During that period, the company also announced merger plans with Genesis Minerals, sparking a rally in St Barbara shares, and contributing to a reduction in shorts.

4. Evolution Mining (ASX: EVN)

Another beneficiary of higher gold prices, short interest in Evolution Mining has declined by 430 basis points over the last month. Aggregate short interest now represents 1.2% of all securities on issue. With the US dollar pulling back from its recent highs, the price of gold topped US$1,800 per ounce on several occasions. That led to major rallies across the gold sector, with Evolution Mining one of the best performers from the ASX 200.

5. City Chic Collective (ASX: CCX)

Retailer City Chic ends 2022 at multi-year lows, with the stock tanking over 90% this year. As it turns out, the latest bout of selling pressure has coincided with a falling level of short interest. This suggests short sellers have wound back their bets given the company valuation is now around $100 million, potentially limiting the upside for short sellers. Total short interest in CCX is now 2.7% of all securities on issue, down from 6.2% in late November.