Short & Caught: Pilbara Minerals is the ASX’s most shorted as lithium prices tumble

Pilbara Minerals now most shorted ASX stock as price of lithium falls from 2022 highs
Raleigh Finlayson’s ~$2 billion market capped gold miner Genesis Minerals also on list
Memory chip maker has 8% of its stock shorted, despite announcing maiden revenue

How does shorting work?

Short sellers effectively borrow a stock from a broker, and go wager it (sell it) on the open market. The plan is to then buy the same stock back later after it’s made a hefty drop in price. That done, the short seller buys it back at the lower price and returns it to the lender.

The difference between the sell price and the buy price is the short seller’s profit. Investors are in effect betting they will fall.

Because shorting is restricted under Australian law (and because it’s an all or nothing bloodsport) any substantial shorting of stocks is worth knowing about, even if you only trade long.

And perhaps there’s method in the madness.

Stockhead has utilised the number of short positions as a percentage of total shares on issue. The most ASX shorted stocks (excluding CDIs) all have 5% or more.

The most shorted stocks on ASX

Swipe or scroll to reveal full table. Click headings to sort:

Code Company Short positions Shares on issue % short positions PLS PILBARA MIN LTD ORDINARY 568,146,773 3,009,462,660 19% SYR SYRAH RESOURCES ORDINARY 114,959,635 675,897,730 17% CXO CORE LITHIUM ORDINARY 230,951,309 2,136,935,544 11% GMD GENESIS MINERALS ORDINARY 110,654,687 1,079,887,829 10% SYA SAYONA MINING LTD ORDINARY 1,006,091,247 10,293,296,014 10% APX APPEN LIMITED ORDINARY 15,129,014 156,921,599 10% IEL IDP EDUCATION LTD ORDINARY 26,157,449 278,336,211 9% FLT FLIGHT CENTRE TRAVEL ORDINARY 20,067,872 219,463,435 9% BOQ BANK OF QUEENSLAND. ORDINARY 54,637,995 659,684,732 8% WBT WEEBIT NANO LTD ORDINARY 14,244,451 187,854,564 8% OBL OMNI BRIDGEWAY LTD ORD US PROHIBITED 20,982,021 280,471,167 7% LLC LENDLEASE GROUP FPO/UNITS STAPLED 51,084,212 689,632,247 7% SHV SELECT HARVESTS ORDINARY 8,782,190 121,058,664 7% LTR LIONTOWN RESOURCES ORDINARY 172,358,385 2,406,408,810 7% ARU ARAFURA RARE EARTHS ORDINARY 149,099,711 2,113,364,692 7% IMU IMUGENE LIMITED ORDINARY 498,692,950 7,164,974,859 7% MSB MESOBLAST LIMITED ORDINARY 56,109,777 814,204,825 7% HVN HARVEY NORMAN ORDINARY 82,264,155 1,246,006,654 7% PEN PENINSULA ENERGY LTD ORDINARY 80,384,828 1,257,798,186 6% ACL AUSTRALIAN CLINICAL LABS ORDINARY 12,487,552 201,834,015 6% AGY ARGOSY MINERALS LTD ORDINARY 83,035,172 1,404,407,498 6% IFL INSIGNIA FINANCIAL ORDINARY 38,979,323 666,626,753 6% JBH JB HI-FI LIMITED ORDINARY 6,371,252 109,333,981 6% LIC LIFESTYLE COMMUNITIES. ORDINARY 6,083,467 104,545,131 6% CHN CHALICE MINING LTD ORDINARY 22,605,563 388,963,304 6% INR IONEER LTD ORDINARY 119,637,321 2,111,412,147 6% NEC NINE ENTERTAINMENT ORDINARY 90,486,170 1,626,270,594 6% LYC LYNAS RARE EARTHS ORDINARY 51,177,922 934,694,336 5% ELD ELDERS LIMITED ORDINARY 8,544,821 156,476,574 5% SLX SILEX SYSTEMS ORDINARY 12,712,630 235,946,075 5% STX STRIKE ENERGY LTD ORDINARY 134,219,484 2,539,297,384 5% TPW TEMPLE & WEBSTER LTD ORDINARY 6,279,386 122,949,702 5% BRN BRAINCHIP LTD ORDINARY 90,769,372 1,790,058,145 5% VUL VULCAN ENERGY ORDINARY 8,178,464 168,335,301 5% NVX NOVONIX LIMITED ORDINARY 22,505,112 488,617,720 5% BRG BREVILLE GROUP LTD ORDINARY 6,574,197 143,425,348 5% DYL DEEP YELLOW LIMITED ORDINARY 34,543,388 758,418,967 5% DMP DOMINO PIZZA ENTERPR ORDINARY 4,025,308 89,811,993 4% SUL SUPER RETAIL ORDINARY 10,115,440 225,826,500 4% WEB WEBJET LIMITED ORDINARY 17,099,652 385,982,154 4% ARB ARB CORPORATION. ORDINARY 3,621,156 82,220,441 4% SFR SANDFIRE RESOURCES ORDINARY 20,091,057 456,992,404 4% PNV POLYNOVO LIMITED ORDINARY 29,814,981 690,232,751 4% PDN PALADIN ENERGY LTD ORDINARY 128,181,434 2,983,375,533 4% BLD BORAL LIMITED. ORDINARY 47,143,135 1,103,088,419 4% CUV CLINUVEL PHARMACEUT. ORDINARY 2,097,023 49,410,338 4% MIN MINERAL RESOURCES. ORDINARY 8,109,251 195,186,428 4% SGM SIMS LIMITED ORDINARY 7,964,608 193,209,667 4% NMT NEOMETALS LTD ORDINARY 22,683,453 553,307,937 4% ZIP ZIP CO LTD.. ORDINARY 36,779,639 903,086,366 4% A2M THE A2 MILK COMPANY ORDINARY 29,184,147 722,934,808 4% CXL CALIX LIMITED ORDINARY 7,267,268 181,363,326 4% DOW DOWNER EDI LIMITED ORDINARY 25,979,485 671,573,679 4% PPT PERPETUAL LIMITED ORDINARY 4,243,110 113,334,546 4% NIC NICKEL INDUSTRIES ORDINARY 158,753,730 4,285,809,880 4% IGO IGO LIMITED ORDINARY 27,048,395 757,267,813 4% BGL BELLEVUE GOLD LTD ORDINARY 40,648,604 1,149,005,566 4% BGA BEGA CHEESE LTD ORDINARY 10,692,614 304,517,775 4%

WordPress Tables Plugin

Pilbara Minerals becomes most shorted stock

In a sign of just how much falling lithium prices are weighing on ASX lithium stocks in 2023 Pilbara Minerals (ASX:PLS) has become the most shorted stock on the Aussie bourse.

The ASX 200 lithium company currently has 19% of its stock currently shorted.

Seneca investment analyst Ben Richards told Stockhead PLS is being targeted by short sellers as a pureplay exposure to falling lithium chemical prices.

“Given that PLS is the largest, most liquid pureplay producer, it is the cleanest way for hedge funds to get borrow on the stock in large size and bet against the lithium price,” he says.

“Lithium prices have been falling in 2023, coming off elevated heights due to softer than expected EV demand and destocking of Chinese inventories.

“While commodity prices tend to overshoot to both the upside and the downside, lithium carbonate prices have breached levels where we expect to see cost curve support in the long run, with low quality lepidolites producing at costs of ~US$25,000/t lithium carbonate. ”

Richards says given the cost curve support, there are opportunities arising in the lithium sector if you believe that EV penetration will continue to rapidly grow and if lithium-ion batteries remain the dominant battery chemistry.

Furthermore Richards says PLS also has a capex program ahead to expand production from ~620ktpa to 1,000ktpa, which is expected to lead to negative free cashflow in FY24.

However, Richards says PLS can internally fund the program with ~$3 billion cash on the balance sheet and no debt.

“Shorting PLS at these prices is a risky bet, given that almost 20% of the register is now sold short,” he says.

“By our calculations, 568 million shares are currently short sold (on a 4-day lag), and with an average daily turnover of ~30 million shares traded per day, that’s about 19 full trading days required to cover the outstanding shorts.

“If lithium prices do turn and spike higher, we could see a short squeeze in PLS shares.”

The PLS share price is down 5.47% YTD and ~10% in the past month.

PLS is not the only lithium stock targeted by short sellers. Core Lithium (ASX:CXO), Syrah Resources (ASX:SYR), Sayona Mining (ASX:SYA), and Liontown Resources (ASX:LTR) are also on the list of the most ASX shorted stocks.

Raleigh Finlayson’s ~$2 billion market capped gold miner Genesis Minerals (ASX:GMD) is also on the list of short sellers.

GMS in June completed the acquisition of the Leonora assets of St Barbara (ASX:SBM) with chairman Anthony Kiernan telling its recent AGM the company’s strategy and aim is “building a premium Australian gold business with sustainable, high quality, +300,000 ounces per annum production”.

GMS recently put together an off-market takeover bid for the remaining DCN shares it didn’t already own.

“We are now progressing to 100% ownership of Dacian,” Kiernan said in his address.

“Dacian’s Mt Morgans mill is an integral part of Genesis’ future.”

The GMD share price is up more than 26% in the past month and 47% YTD.

The PLS, CXO, SYA, LTR, SYR, GMD share price today:

Smooth flying for Flight Centre? Not quite

Flight Centre (ASX:FLT) is finally catching a break with short sellers as the the travel stock, which has been the most shorted stock on the ASX for much of 2022 and 2023, sees its position improve.

FLT’s short position has dropped down to 9% so it’s not completely enjoying a turbulent-free flight with short sellers, but it is an improvement from higher positions.

The FLT share price has risen more than 40% YTD as the company said it is continuing to recover from Covid-19 travel disruptions.

At its AGM in mid-November founder Graham ‘Skroo’ Turner said FLT had a strong start to FY24 with Q1 TTV increasing about 20% or more than $900 million on pcp to $6 billion, just below the record of ~$6.2 billion four years ago.

“In terms of FY24 guidance, we currently expect underlying PBT between $270 million and $310 million,” Turner said.

“The mid-point – $290 million – represents almost 175% growth on FY23 and is broadly in line with current market consensus.”

Short sellers target IDP Education

IDP Education (ASX:IEL), which specialises in international student placement services and high-stakes English language testing, is also a target of short sellers.

IEL also operates English language schools in Southeast Asia and organises educational events and conferences across the globe.

At its AGM chairman Peter Polson said FY23 was “a very successful one” for the company. IEL achieved record revenue of $982 million, a 24% increase on FY22, driven primarily by its student placement business.

The company recorded $228 million in adjusted earnings before interest and tax, a 40% increase from FY22.

“Our adjusted net profit after tax reached $154 million, a new company record, and 45% higher than FY22,” Polson said.

“In fact, it was a record year across all of our key operational and financial metrics.”

The IEL share price is down ~16% YTD but up more than 5% in the past month.

Short sellers not seeing upside in Weebit Nano

Memory chip maker Weebit Nano (ASX:WBT) has 8% of its stock shorted, despite announcing it has just earned maiden revenue, a key milestone for a tech company.

In early November WBT announced its first IP licensing revenue of US$100k for its embedded Resistive Random-Access Memory (ReRAM) technology.

WBT considers the fact that Weebit Nano is no longer “pre-revenue” to be material, as it marks the company’s transition to commercialisation phase.

READ: Weebit Nano wins the ASX semiconductor race to revenue, partners with Tier-1 foundries

The FLT, IEL & WBT share price today:

Retail and medical stocks also shorted

Several consumer discretionary stocks which could take the toll of higher interest rate rises and cost of living also continue to be targeted by short-sellers including JB HiFi (ASX:JBH), Harvey Norman Holdings (ASX:HVN),Domino’s Pizza Enterprises (ASX:DMP), Super Retail Group (ASX:SUL) and Temple & Webster (ASX:TPW).

Short sellers also are betting against health stocks including cancer fighter Imugene (ASX:IMU), Mesoblast (ASX:MSB) and Australian Clinical Labs (ASX:ACL).

MSB recently announced that the Blood and Marrow Transplant Clinical Trials Network (BMT CTN) has entered into a deal to develop a pivotal trial of its lead product candidate Ryoncil (remestemcel-L) in treatment of adults with steroid-refractory acute graft versus host disease (SR-aGvHD).