Key takeaways:

• Heavy losses for the Nasdaq earlier in October have led to increased short interest in ASX tech stocks

• Shorters have also been targeting stocks susceptible to higher inflation given the implications for earnings to be impacted

Weakness in equity markets over the last month has seen a disproportionate increase in the number of stocks where short interest has increased, as opposed to those where short selling has eased.

However, the themes that have been targeted are quite telling for investors, offering a reminder that broader market conditions and macroeconomic factors may at times override the fundamentals of a stock, or its newsflow. 

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)

Short interest in travel agency Flight Centre has barely budged throughout the year, and October has been no different. Even a strong performance for the company share price this month has done little to deter shorters, with over 15% of all shares on issue sold short.

2. BetMakers Technology (ASX: BET)

Swelling losses and a valuation of nearly $300 million still appear to be fresh in the minds of short sellers targeting BetMakers, with the aggregate level of short interest in the online wagering platform relatively steady versus last month at 14.1% of all shares on issue. 

3. Block (ASX: SQ2)

With the Nasdaq recently hitting a 28-month low, tech stocks have been a prime target for short selling. Block shares, which are also listed on the NYSE, traded below pre-pandemic levels a couple weeks ago, prompting short interest in the ASX stock to rise to 12% of all securities on issue. 

4. Megaport (ASX: MP1)

Another tech name feeling the heat following a shift in sentiment, short interest in Megaport has increased quite notably over the last month. On an aggregate basis, 11.9% of the company shares are currently sold short. It appears short sellers have been somewhat vindicated, with the company recently releasing a disappointing first-quarter trading update where growth in customer numbers and ports effectively hit a wall, and installed data centre growth went backwards.

5. Domino Pizza (ASX: DMP)

One of the most well known fast-food enterprises, short interest in Domino has tripled over the last three months to 10.9%. Previously, the company has cited the impact that inflation is having on its business, and it is likely that short sellers see further difficulties ahead for the business with rising costs in a number of its key markets across the world.

RankCompany% Securities Reported as Sold ShortOct, 2022Monthly Change1Flight Centre (ASX: FLT)15.3%+0.22BetMakers Tech (ASX: BET)14.1%+0.33Block (ASX: SQ2)12.0%+1.64Megaport (ASX: MP1)11.9%+2.65Domino (ASX: DMP)10.9%+4.86Perpetual (ASX: PPT)10.9%+4.07Lake Resources (ASX: LKE)8.9%-1.58Temple & Webster (ASX: TPW)8.5%+1.69Breville Group (ASX: BRG)8.5%+1.010Nanosonics (ASX: NAN)8.4%+0.5

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

Major Movers

1. Domino (ASX: DMP)

As mentioned earlier, short interest in the pizza fast-food franchise is currently at 10.9%, but this is 4.8 percentage points higher than the same time last month. At the start of the year, short interest in the stock was just 1.3% of all shares on issue, with two material step changes along the way, firstly in March, and then more recently following the company full-year results at the end of August, where management touched on inflation challenges. 

2. St Barbara (ASX: SBM)

Shorters have latched onto gold producer St Barbara, with its shares falling to their lowest level in more than seven years. The stock has been in a downward spiral for months now, with what seems to be little respite for shareholders. This is another example where it appears short sellers have been proven correct thus far, with the company recently downgrading its full-year production guidance and increasing its cost guidance due to inflationary pressure. Short interest has increased by 4 percentage points to 6.5% of all securities on issue

3. Perpetual (ASX: PPT)

For the second consecutive month, short interest in fund manager Perpetual has grown rapidly, hitting a three-year high. At the time of this report, an aggregate of 10.9% shares on issue were sold short, up 4 percentage points versus a month ago. While shorters have raised questions about Perpetual tie-up with Pendal, weakness across equity markets is also likely to be fuelling bets against the fund manager.

4. Sayona Mining (ASX: SYA)

Another stock facing a concerted increase in short interest for the second time in as many months, Sayona Mining has gone from being the 50th most shorted security on the ASX to now sitting in 12th position. With shorts up 3.6 percentage points for the month, 8.1% of all shares on issue are sold short in the lithium explorer, which has released a series of price-sensitive announcements over recent weeks that, among other items, included the launch of Pre-Feasibility Studies at its key sites.

5. Boral (ASX: BLD)

When building materials supplier Boral reported in August, it indicated prices would increase by the most in five years in response to soaring fuel and energy prices. However, inclement weather, housing market sentiment amid rising interest rates, and doubts about the company ability to offset elevated inflation are likely behind a sharp increase in short activity. As it stands, 5.4% of all shares on issue are sold short, which is 3.4 percentage points higher than this time last month.