Short & Caught: Pilbara Minerals ASX’s most shorted as lithium stocks targeted

Pilbara Minerals remains most shorted ASX stock as price of lithium fell heavily in 2023
Deep Yellow and Peninsula Energy among ASX most shorted stocks as uranium prices keep rising
Flight Centre short position falls after being ASX’s most shorted stock for much of 2022 and 2023

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 613,443,977 3,009,467,945 20% SYR SYRAH RESOURCES ORDINARY 97,536,755 675,897,730 14% CXO CORE LITHIUM ORDINARY 286,456,227 2,136,935,544 13% DYL DEEP YELLOW LIMITED ORDINARY 77,766,980 764,185,375 10% SYA SAYONA MINING LTD ORDINARY 937,642,474 10,293,296,014 9% GMD GENESIS MINERALS ORDINARY 99,797,607 1,099,862,562 9% IEL IDP EDUCATION LTD ORDINARY 24,424,939 278,336,211 9% FLT FLIGHT CENTRE TRAVEL ORDINARY 18,035,774 219,496,767 8% LTR LIONTOWN RESOURCES ORDINARY 198,392,924 2,421,984,755 8% WBT WEEBIT NANO LTD ORDINARY 13,683,890 188,044,564 7% BOQ BANK OF QUEENSLAND. ORDINARY 43,912,984 659,684,732 7% HVN HARVEY NORMAN ORDINARY 81,049,046 1,246,006,654 7% PEN PENINSULA ENERGY LTD ORDINARY 80,421,879 1,260,505,340 6% LYC LYNAS RARE EARTHS ORDINARY 56,277,340 934,694,336 6% CHN CHALICE MINING LTD ORDINARY 22,567,258 388,963,304 6% LIC LIFESTYLE COMMUNIT. ORDINARY 5,818,385 104,545,131 6% IMU IMUGENE LIMITED ORDINARY 398,655,270 7,169,086,938 6% ACL AU CLINICAL LABS ORDINARY 10,916,273 201,834,015 5% SHV SELECT HARVESTS ORDINARY 6,445,059 121,058,664 5% JBH JB HI-FI LIMITED ORDINARY 5,768,467 109,333,981 5% MIN MINERAL RESOURCES. ORDINARY 9,483,733 195,186,428 5% NVX NOVONIX LIMITED ORDINARY 23,720,945 488,733,461 5% WEB WEBJET LIMITED ORDINARY 18,337,931 386,352,154 5% IFL INSIGNIA FINANCIAL ORDINARY 31,120,540 666,626,753 5% CUV CLINUVEL PHARMACEUT. ORDINARY 2,311,946 50,127,270 5% SLX SILEX SYSTEMS ORDINARY 10,855,797 235,946,075 5% PNV POLYNOVO LIMITED ORDINARY 31,185,017 690,232,751 5% BRG BREVILLE GROUP LTD ORDINARY 6,426,248 143,425,348 4% A2M THE A2 MILK COMPANY ORDINARY 31,735,518 722,934,808 4% STX STRIKE ENERGY LTD ORDINARY 111,309,291 2,539,297,384 4% SFR SANDFIRE RESOURCES ORDINARY 19,748,484 456,992,404 4% ZIP ZIP CO LTD.. ORDINARY 41,679,723 971,984,648 4% NEC NINE ENTERTAINMENT ORDINARY 69,420,553 1,623,392,715 4% HCW HEALTHCO HEALTHCARE & WELLNESS REIT ORDINARY 23,571,589 568,274,049 4% BLD BORAL LIMITED. ORDINARY 45,264,803 1,103,088,419 4% PPT PERPETUAL LIMITED ORDINARY 4,598,228 113,334,546 4% CXL CALIX LIMITED ORDINARY 7,349,504 181,363,326 4% TLG TALGA GROUP LTD ORDINARY 15,276,867 379,754,172 4% SUL SUPER RET REP LTD ORDINARY 9,077,545 225,826,500 4% DMP DOMINO PIZZA ENTERPR ORDINARY 3,592,705 89,813,926 4% AGY ARGOSY MINERALS LTD ORDINARY 55,539,351 1,404,407,498 4% ELD ELDERS LIMITED ORDINARY 6,210,113 157,370,028 4% NAN NANOSONICS LIMITED ORDINARY 11,769,142 302,829,367 4% AWC ALUMINA LIMITED ORDINARY 110,815,949 2,901,681,417 4% IGO IGO LIMITED ORDINARY 28,825,590 757,267,813 4% INR IONEER LTD ORDINARY 80,104,314 2,111,412,147 4% NIC NICKEL INDUSTRIES ORDINARY 160,397,765 4,285,809,880 4% NUF NUFARM LIMITED ORDINARY 13,776,187 382,080,598 4% BEN BENDIGO AND ADELAIDE ORDINARY 20,306,732 567,764,728 4% ARB ARB CORPORATION. ORDINARY 2,923,169 82,220,441 4% BRN BRAINCHIP LTD ORDINARY 63,468,779 1,805,814,685 4%

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Pilbara Minerals remains most shorted ASX stock

As falling lithium prices continue to weigh on ASX lithium stocks heading into 2024, Pilbara Minerals (ASX:PLS) remains the most shorted stock on the Aussie bourse after rising to top spot late last year.

The ASX 200 lithium company currently has 20% of its stock currently shorted, up from 19% in late November. Analysts say PLS is most likely targeted by short sellers as a pure play 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,” Seneca investment analyst Ben Richards told Stockhead late last year.

Lithium prices came off elevated highs last year due to softer than expected EV demand and destocking of Chinese inventories. Benchmark Minerals’ lithium price index fell ~78% in 2023.

Other lithium stocks are also being targeted by short sellers. Core Lithium (ASX:CXO), Syrah Resources (ASX:SYR), Sayona Mining (ASX:SYA), and Liontown Resources (ASX:LTR) also remain on the list of the most ASX shorted stocks.

However, according to Joe Lowry, host of The Global Lithium Podcast, who has been dubbed “Mr Lithium” and is one of the world’s foremost lithium market experts, the battery metals price could improve in 2024.

Lowry told Stockhead what happened in 2023 wasn’t a shock.

“I have been in this business for over three decades – lithium battery supply chain disconnects have happened multiple times,” he says.

“In 2022, all facets of the supply chain developed excess inventory, so in effect 2022 wasn’t as great a year as it looked, the price run up was unnecessary, and 2023 was a year of correction.”

Lowry believes the long term lithium demand story is still intact.

“I expect lithium chemical supply to be close to balanced but as inventories are rebuilt in China, price will begin to rise sometime in 2024,” he says.

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

Resources stocks target of short sellers

Apart from lithium, several resources stocks were on the list of short sellers including Raleigh Finlayson’s ~$2 billion market capped gold miner Genesis Minerals (ASX:GMD).

Last year GMD completed the acquisition of the Leonora assets of St Barbara (ASX:SBM) and in December announced it had completed its off-market takeover of Dacian Gold (ASX:DCN).

The company’s strategy is “building a premium Australian gold business with sustainable, high quality, +300,000 ounces per annum production”.

Deep Yellow (ASX:DYL) and Peninsula Energy (ASX:PEN) have entered 2024 with 10% and 6% of their stock shorted respectively as uranium sentiment – and prices – are on the rise.

Uranium prices are now above the US$90/mark and surpassing a 16-year high.

DYL last week announced the follow-up drill program at its Barking Gecko prospect on EPL3669 is complete. The program included eight reverse circulation (RC) holes totalling 1,558m. Results include: 9m at 382ppm eU3O8 from 203m at TN294RC, and 3m at 260ppm eU3O8 from 64m at TN297RC.

PEN in November announced it had received binding commitments from new and existing institutional and sophisticated investors for a $50 million placement to progress pre-production works at Lance to achieve a production restart in late 2024.

Lynas (ASX:LYC), Chalice Gold Mines (ASX:CHN), Mineral Resources (ASX:MIN) and Sandfire Resources (ASX:SFR) were among other resource stocks targeted by short sellers at the start of 2024.

The GMD, DYL, PEN, LYC, CHN, MIN & SFR share price today:

Other stocks worth noting

Flight Centre (ASX:FLT), which was the most shorted stock on the ASX for much of 2022 and 2023, has seen its short position further improve at the start of 2024.

Several consumer discretionary stocks also continue to be targeted by short-sellers including JB Hi-Fi (ASX:JBH), Harvey Norman Holdings (ASX:HVN),Domino’s Pizza Enterprises (ASX:DMP) and Super Retail Group (ASX:SUL) as higher interest rates and cost of living pressures continue to bite.

Short-sellers also continue to bet against health stocks including cancer fighter Imugene (ASX:IMU) and Clinuvel Pharmaceuticals (ASX:CUV), which is focused on developing and commercialising treatments for patients with genetic, metabolic, systemic, and life-threatening acute disorders.

Morningstar recently announced a fair value estimate of $18 on CUV and says the stock currently looks undervalued, trading at an 11% discount.

The broker says the company’s key product, Scenesse, is the only approved treatment for phototoxic reactions specifically associated with erythropoietic protoporphyria (EPP), a rare genetic disease, the broker says.

“We suspect the market is likely too pessimistic on the speed and extent of Clinuvel’s commercial rollout of Scenesse for its existing indication which contributes 83% to our fair value estimate.”