The Australian Securities Exchange (ASX) continues to be a dynamic arena for investors, and understanding the ebb and flow of market sentiment is crucial. This series delves into the realm of short selling, highlighting the stocks that are attracting the most bearish attention and those where short interest is undergoing significant shifts.
It’s important to note that the data presented here carries a slight lag. Due to reporting regulations, short selling information is typically four business days behind the current date. This allows for a clear comparison of week-on-week and month-on-month changes in short interest.
The Heavily Shorted Stocks on the ASX
At the forefront of bearish sentiment are the companies with the highest percentage of their stock being shorted. These are the names that seasoned traders are betting against, often due to perceived overvaluation, poor fundamentals, or anticipated negative developments.
Here’s a snapshot of the most heavily shorted stocks, examining their short percentage and how it has changed over recent periods:
- Domino’s Pizza (DMP): Holding a significant short interest of 16.96%, Domino’s has seen a slight decrease in shorting week-on-week (-0.25%) and a more substantial reduction month-on-month (-0.73%).
- Boss Energy (BOE): With a short percentage of 16.64%, Boss Energy has experienced a notable increase in short interest over the past week (0.52%), though its month-on-month figure shows a considerable decrease (-3.05%).
- Guzman Y Gomez (GYG): This popular fast-casual chain has a short interest of 14.06%. It has seen a modest uptick in shorting week-on-week (0.11%) and a slight increase month-on-month (0.37%).
- Treasury Wine Estates (TWE): The wine giant, Treasury Wine Estates, has a short percentage of 13.77%. This stock has witnessed a positive shift in short interest, with an increase of 0.37% week-on-week and a substantial rise of 3.73% month-on-month.
- Flight Centre Travel Group (FLT): The travel giant, Flight Centre, has 12.16% of its shares shorted. This indicates growing bearish sentiment, with a 0.42% increase week-on-week and a 2.01% rise month-on-month.
- Polynovo (PNV): With a short interest of 12.05%, Polynovo has seen a marginal decrease in shorting week-on-week (-0.04%) but a slight increase month-on-month (0.46%).
- Telix Pharmaceuticals (TLX): Telix Pharmaceuticals has attracted significant short interest at 11.94%. It has experienced a notable increase in shorting, up by 0.62% week-on-week and 0.69% month-on-month.
- IDP Education (IEL): The education services provider, IDP Education, has a short interest of 11.72%. This stock has seen a decrease in shorting week-on-week (-0.36%) and month-on-month (-0.70%).
- IPH (IPH): Intellectual property firm IPH has a short percentage of 11.02%. It has seen an increase in shorting week-on-week (0.23%) and a more significant rise month-on-month (1.85%).
- PWR Holdings (PWH): PWR Holdings currently has a short interest of 10.24%. This stock has experienced a decrease in shorting week-on-week (-0.13%) and a more pronounced reduction month-on-month (-1.70%).
A key observation from this list is the relative stability at the very top. The leading heavily shorted stocks haven’t undergone dramatic shifts in their overall short interest percentages, suggesting a sustained bearish outlook for these particular companies.
Stocks Experiencing Rising Short Interest
Beyond the overall heavily shorted, it’s insightful to track which stocks are seeing an increase in short selling activity. This can be an early indicator of developing negative sentiment or a reaction to specific company news or market conditions.
Here are the stocks that have experienced significant week-on-week increases in their short interest (typically 0.5% or more):
- PLS Group (PLS): This stock has seen a substantial 1.00% increase in short interest week-on-week, bringing its total to 8.17%. This rise coincides with a notable pullback in Chinese lithium carbonate futures, which have fallen approximately 27% from recent peaks. This suggests that short sellers are betting on further declines in commodity prices impacting PLS.
- Viva Energy Group (VEA): Viva Energy has experienced an 0.86% week-on-week increase in short interest, reaching 2.48%. This uptick followed a disappointing Q4 result, where refining margins were weaker than anticipated, and the Convenience & Mobility division showed ongoing softness. Planned maintenance and delays at the Geelong refinery, along with weaker convenience fuel volumes and shop sales, contributed to the negative sentiment. The absence of FY25 EBITDA guidance further dampened investor confidence.
- SILEX Systems (SLX): With an 0.85% week-on-week rise, SILEX Systems now has 9.01% of its shares shorted.
- Breville Group (BRG): Breville Group has seen its short interest climb by 0.70% week-on-week, standing at 8.97%.
- Perpetual (PPT): Perpetual has recorded a 0.68% increase in short interest week-on-week, bringing its total to 2.66%.
- Peninsula Energy (PEN): This stock has seen a 0.66% week-on-week increase in short interest, now at 1.42%.
- Northern Star Resources (NST): Northern Star Resources has experienced a 0.65% week-on-week rise in short interest, reaching 1.20%.
- Telix Pharmaceuticals (TLX): As noted earlier, Telix Pharmaceuticals continues to attract short sellers, with a 0.62% week-on-week increase in its short interest.
- Cettire (CTT): The online retailer Cettire has seen its short interest grow by 0.61% week-on-week, standing at 1.56%.
- Clarity Pharmaceuticals (CU6): Clarity Pharmaceuticals has experienced a 0.60% week-on-week increase in short interest, now at 7.53%.
- Syrah Resources (SYR): Syrah Resources has seen a 0.58% week-on-week increase in short interest, bringing its total to 3.16%.
- Catapult Sports (CAT): Catapult Sports has attracted more short sellers, with a 0.56% week-on-week increase in its short interest.
- Inghams Group (ING): Inghams Group has experienced a 0.54% week-on-week rise in short interest, now at 6.39%.
- Boss Energy (BOE): As mentioned in the heavily shorted section, Boss Energy has seen a 0.52% week-on-week increase in short interest.
- Macquarie Technology Group (MAQ): Macquarie Technology Group has seen its short interest increase by 0.51% week-on-week, standing at 4.46%.
- Elevate Lithium (ELV): Elevate Lithium has also experienced a 0.51% week-on-week increase in short interest.
The rise in short interest for PLS, driven by commodity price movements, and for Viva Energy, following a disappointing earnings report, are particularly noteworthy. These instances demonstrate how specific news and market trends can quickly influence short seller sentiment.
Stocks Seeing Significant Short Covering
Conversely, some stocks experience a reduction in short interest as short sellers close their positions. This can happen for various reasons, including a belief that the stock has fallen too far, a positive development for the company, or simply to lock in profits.
Here are the stocks that have seen the most significant week-on-week reduction in short interest:
- Droneshield (DRO): Droneshield has experienced a substantial decrease in short interest, down by 1.37% week-on-week, bringing its total to 8.55%. This comes after a period of extreme volatility, with the stock plunging 30% before recovering 12% in early February.
- Appen (APX): Appen has seen a significant reduction in short interest, down by 1.15% week-on-week, to 1.78%. This likely follows a strong rally in the stock, up 71% on the back of a solid December quarter result. Appen reported robust revenue growth and a significant jump in underlying EBITDA, particularly driven by its China segment and strong demand for generative AI projects. This positive performance likely pressured short sellers to cover their positions.
- Bannerman Energy (BMN): Bannerman Energy has seen a 0.72% week-on-week decrease in short interest, standing at 4.50%.
- Magellan Financial Group (MFG): Magellan Financial Group has experienced a 0.62% week-on-week reduction in short interest, now at 4.44%.
- AUB Group (AUB): AUB Group has seen a 0.40% week-on-week decrease in short interest.
The sharp rally in Appen, fuelled by strong operational results, is a prime example of how positive news can lead to significant short covering, potentially creating a short squeeze. The volatility in Droneshield also highlights how rapidly sentiment can shift, leading to both sharp declines and subsequent recoveries that can impact short positions.
Understanding these movements in short interest provides valuable insights into market sentiment and can be a useful tool for investors navigating the complexities of the ASX.
