Key takeaways:

• Five of the top 10 most shorted stocks on the ASX are lithium shares

As investors adjust their expectations for the interest rate outlook in 2023, some old favourites have found themselves in the crosshairs of shorters once again. Lithium stocks are the main talking point in short seller circles over the last month, with the duel between bulls and bears focusing on the outlook for lithium prices amid an extended slump over the last couple months.

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. BetMakers Technology (ASX: BET)

With its shares hitting a new multi-year low in February, wagering tech and data partner BetMakers Technology also achieved the unwanted feat of being the most shorted ASX stock. Overall short interest in the company actually declined over the course of the month, likely due to the fact shorters could see limited gains from current levels. However, with 11.8% of all securities sold short, the stock remains a prime target among those doubting a sustainable pathway for the business.

2. Flight Centre (ASX: FLT)

After what seems like an eternity, travel agency Flight Centre briefly shaked its tag as the most shorted stock on the ASX - albeit has since reclaimed the mantle. With aggregate short interest declining by 270 basis points over the last month, 11.4% of all securities are sold short. 

While FLT shareholders may be optimistic about the headline improvement, the decrease in short interest was driven by an increase in the overall number of shares on issue. That follows Flight Centre $220 million acquisition of UK luxury travel business Scott Dunn, funded via a capital raise.

3. Sayona Mining (ASX: SYA)

One of a number of lithium stocks where short activity picked up, Sayona Mining is in third spot among the favourite targets of ASX short sellers. An exciting start to the year for lithium stocks has quickly reversed course as observers begin to question the price outlook for the commodity. What more, the company update confirming that its North American Lithium operation remains on track for imminent production did little to arrest selling pressure.

4. Core Lithium (ASX: CXO)

A month ago there were just three battery metals stocks in the top 10 most shorted names, and that has now grown to five. Core Lithium is one of the targets that has leapt higher up the list, with the total percentage of its securities reported as sold short increasing by 80 basis points to 9.1%. Lithium spot prices have continued to decrease since mid-November, with momentum only increasing since the end of January.

5. Megaport (ASX: MP1)

Short interest in network as a service provider Megaport decreased modestly over the last month, down 70 basis points to 9.4% of all securities on issue. However, the tech company interim results, released in early February, offered little to encourage short sellers to close out their positions as low growth in customers and services, and a shrinking cash balance overshadowed an EBITDA-positive result.

RankCompany

% Securities Reported as Sold Short

Feb, 2023

Monthly Change

1. BetMakers Tech (ASX: BET) - 11.8% -1.1

2. Flight Centre (ASX: FLT) - 11.4% -2.7

3. Sayona Mining (ASX: SYA) - 10.7% +1.1

4. Core Lithium (ASX: CXO) - 9.1% +0.8

5. Megaport (ASX: MP1) - 9.4% -0.7

6. Zip (ASX: ZIP) - 7.7% +1.3

7. Liontown Resources (ASX: LTR) - 7.7% +0.3

8. Pointsbet (ASX: PBH) - 7.1% +0.3

9. Lake Resources (ASX: LKE) - 6.9% -0.8

10. Vulcan Energy (ASX: VUL) - 6.9% +0.6

* Data is T+4, based on information reported to ASIC for February 20, 2023; rounded to one decimal

Major Movers

1. Perpetual (ASX: PPT)

After its acquisition of industry peer Pendal took effect, short interest in fund manager Perpetual decreased significantly in light of the combined entity new capital structure. In the space of just a few days, total short interest fell from 13.5% of all securities on issue to just 0.6%, albeit that number has since crept up slowly to reach 0.8% at the time of writing.

2. Mayne Pharma Group (ASX: MYX)

After undertaking a share consolidation and issuing a special dividend, short interest in novel and generic pharmaceuticals company Mayne springed back to where it was. A month ago the stock registered a short interest reading of just 0.5%, but that is now sitting back at 4.6% following the resumption of trading in the stock on a normal settlement basis. 

The company has previously attracted short interest in relation to its debt levels, and it has been selling non-core divisions to fund commercial activity across its US women health portfolio, dermatology products, and international business.

3. McMillan Shakespeare (ASX: MMS)

A month ago the total level of short interest in salary packaging and fleet management company McMillan Shakespeare represented just 0.3% of all securities on issue. Fast forward a month and aggregate short interest has risen to 3% and is still climbing. 

In the absence of any news that might explain the increase over that period, and a share price circling a yearly high, short sellers may be questioning the company outlook given the uncertain economic environment and what that could mean for employers and benefits for employees.

4. Centuria Industrial REIT (ASX: CIP)

Another stock where short interest has suddenly picked up in the space of a few days, and would appear to be continuing even after the period in question, is Centuria Industrial REIT. The timing of the increase suggests that the company $300 million exchange notes offering - a capital management initiative that diversifies the company capital structure - may have had some role to play in driving an uptick in short activity.

5. City Chic (ASX: CCX)

It been a tough month for shareholders in women fashion retailer City Chic, with the stock resuming its downtrend after a brief rally. Short interest in the stock has risen since the start of the new year, gathering pace as the company shares seemingly hit a short-term top in late January. 

That was around the same time that a trading update provided by the company raised a number of headwinds, including a higher cost of doing business, volatile demand, promotional activity weighing on gross margins, and lower sales revenue.