ASX Short Report September: Sayona Mining, Perpetual in shorters sights
Rene Anthony
With the market recently circling a yearly-low, a number of ASX stocks have become targets for short selling, a high-risk practice that allows investors to profit from the decline in share price of a stock.
Many of the stocks reporting high short interest in September are growth stocks that have been market favourites at one point in time. These stocks often see bouts of volatility stemming from the fact that buyers and short sellers are slugging it out over the direction of each company share price.
The list of the most shorted stocks may provide investors with some insights about sentiment towards particular stocks, and we break down some of the potential reasons behind a company short interest, or the month-to-month movement in short interest.
Selfwealth does not offer short selling. Please note, data below is for information purposes, 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)
A regular at the top of the list of the most shorted stocks in 2022, featuring in number one spot every week this year, Flight Centre has divided the market.
Although the travel sector has recovered quickly over recent months, and the company corporate and leisure divisions returned to being in the black during late FY22, a worrying outlook for the global economy may be prompting negative views about discretionary travel over the coming months.
The current level of aggregate short interest in the stock is 15.1% of all shares on issue, down from a high of 18.5% in mid-April, before the travel boom took off in the northern hemisphere during summer.
2. BetMakers Technology (ASX: BET)
Short selling interest in online wagering platform BetMakers Technology Group increased by 110 basis points over the last month to 13.8%. While that is not as high as the levels seen back in May, it has played a role in driving the company share price towards a new 52-week low of $0.30 per share.
The company on-market buyback has done little to shore up support for the stock, which suggests its growing losses - $89 million in FY22 - are proving hard to swallow for new buyers.
3. Lake Resources (ASX: LKE)
One of the more volatile names in the ASX 200, and a favourite among the Selfwealth community, lithium explorer Lake Resources has previously found itself the target of an official short report by J Capital, which took aim at the viability of its direct lithium extraction (DLE) technology.
Since that report was released in mid June, short interest in LKE shares has steadily increased. From an aggregate short position of 3.3% of all shares in mid-June, the total percentage of securities reported as sold short reached 10.4% this month.
4. Block (ASX: SQ2)
Parent company to one-time favourite Afterpay, short interest in Block fell by four-tenths of a percent in September, sitting at 10.4% of all securities on issue.
With its exposure to the buy-now pay-later segment, an area that has come under increasing regulatory scrutiny over the last 18 months or so, it appears short sellers believe the industry still has tough times ahead as interest rates rise, putting pressure on bad debts.
In addition, the overall tech sell-off, and a bear market for crypto have also contributed to strong negative sentiment towards the Group.
5. Megaport (ASX: MP1)
A prominent name in the local tech sector, Megaport has been at the mercy of a sell-off in overseas tech stocks, with support for Nasdaq tech stocks looking weak of late. Based on the information available at the time of this report, Megaport is the fifth most shorted stock on the ASX by percentage of total shares issued, at 9.3%, whereas at the start of the year that figure was just 2.1%.
RankCompany
% Securities Reported as Sold Short
Sep, 2022
Monthly Change
Flight Centre (ASX: FLT) - 15.1% 0
BetMakers Tech (ASX: BET) - 13.8% +1.1
Lake Resources (ASX: LKE) - 10.4% +0.4
Block (ASX: SQ2) - 10.4% -0.4
Megaport (ASX: MP1) - 9.3% +1.6
Nanosonics (ASX: NAN) - 7.9% -2.8
Inghams (ASX: ING) - 7.9% -0.1
Zip Co (ASX: ZIP) - 7.9% -1.7
De Grey Mining (ASX: DEG) - 7.5% -3.5
Breville Group (ASX: BRG) - 7.5% +1.2
*Data is T+4, based on information reported to ASIC for September 21, 2022; rounded to one decimal
Major Movers
1. Laramide Resources (ASX: LAM)
Short interest in Laramide Resources decreased from 5.5% to 0% over recent weeks, which suggests existing short sellers closed out their positions. The stock, which is dual-listed on the TSE, is very thinly traded on the ASX, with negligible volume, so the appearance of this name seems to be more of an isolated investment strategy by a few short sellers.
2. Perpetual (ASX: PPT)
Well-known fund manager Perpetual has seen the percentage of its total shares on issue that are sold short increase from 1.6% this time last month, to 6.9%, which is the highest it has been all this year. In fact, at the start of the year, aggregate short interest in the stock was just 1.2%, but it is now inside the top 20 most shorted names.
The recent uptick has coincided with the company decision to acquire ASX-listed peer Pendal (ASX: PDL). It would appear that a number of short sellers are betting the move could be a risky proposition for the fund manager.3. Sayona Mining (ASX: SYA)
Over the last month, shares in Sayona Mining have seen sharp movements, from $0.27 per share, up to $0.36 per share, and since back below where it started. Short interest has also accumulated over that period, from just 0.7% of all shares on issue a month ago, to 4.5% as of September 21.
While the stock may be the 50th most shorted security on the ASX, a large increase in short activity occurred on September 16, just before the company was admitted to the ASX 200, and when it announced the restart of its North American Lithium (LAM) operations were on track for Q1 2023.
4. De Grey Mining (ASX: DEG)
Gold exploration company De Grey Mining is the ninth most shorted ASX stock based on reported information, however, the total proportion of shares on issue that are sold short has decreased from 11% in late August, to 7.5%. The company recently released a positive update on its Mallina Gold Project, with short activity falling since that news.
5. EML Payments (ASX: EML)
Payment solutions business EML Payments is currently the 59th most shorted stock on the ASX by percentage of total shares issued. That is a material improvement versus a month ago, with short interest decreasing from 7.2%, to 4.1%. The stock was booted from the ASX 200 during this period, so it may be that short sellers have taken their foot off the pedal given the extent of the company share price decline, which is around 75% year-to-date.
Top 3 Stocks With LargestDecrease in Shorts
Top 3 Stocks With LargestIncrease in Shorts
Company
Monthly Change
% Sold Short Sep, 2022
Laramide Resources(ASX: LAM) -5.5 0
Perpetual(ASX: PPT) - 5.3 +6.9%
De Grey Mining (ASX: DEG) - 3.5 7.5%
Sayona Mining(ASX: SYA), +3.8, 4.5%
EML Payments(ASX: EML), -3.2, 4.1%
Gold Road Res. (ASX: GOR), +2.9, 4.7%
*Data is T+4, based on information reported to ASIC for September 21, 2022; rounded to one decimal
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