21 stocks with a jump in short interest: Lithium, Renewables, Property Tech

Welcome back to the Monthly Short Seller Series where we take a look at companies that have experienced a big month-on-month jump in short interest.

Short interest can be a useful gauge for market sentiment towards both an individual stock and/or sector. A high level of short interest towards a particular sector suggests that institutions are betting against the industry, which is typically a bearish signal.

First, we take a look at new companies appearing on the list. A month ago, these names had very little, if any, short interest.

The data refers short interest changes between 28 November and 23 December 2022.

Interesting observations

Renewables: There's been a rise in short interest among names like Deep Yellow (uranium), Pilbara Minerals (lithium) and Leo Lithium. Most larger cap lithium stocks topped out around November, with Pilbara Minerals down -35% since its 14 November high. This is in-line with changes in Chinese lithium carbonate prices, falling from November peaks of almost 600,000 yuan a tonne to 519,500 yuan in early January 2023. The fall in lithium miner valuations means that these shorts are well in the money.

Property tech: Pexa and REA Group are two tech names experiencing a rise in shorts. Both names are also heavily tied into property sector. A September quarter update from REA group revealed that national listings fell -18% year-on-year in October. While the latest Core Logic update noted a -5.3% drop in housing values in 2022, the largest calendar year decline since 2008.

Bendigo Bank: Bendigo Bank shares experienced an outsized 6.8% rally on Tuesday, 13 December thanks to a positive trading update. Unaudited cash earnings for the five months ending 30 November 2022 rose 22% to $245m and management said they expect net interest margins to continue to expand in the second half of FY23. Perhaps the market reckons the rally has run its course.

Second, we take a look at companies that experienced the largest percentage increase in short interest. Most of these names already had sizeable shorts in the previous month.

Interesting observations

Core Lithium: A few investment banks have been sell rated on Core Lithium since the beginning of December. Goldman Sachs previously said that the stock had "run ahead of fundamentals, trading at 1.5 times net asset value or pricing ~US$2,400/t long-term spodumene." Between the data period (28 Nov - 23 Dec) Core Lithium shares fell -26.6%.

Shorts on battery metals: Alongside Core Lithium, there was a rise in short positions for names like Chalice (nickel, copper and PGEs), Novonix (battery maker) and 29Metals (copper).

Mayne Pharma: This is an interesting one. In short, Mayne Pharma sold one of its businesses and declared a special dividend/capital return initiative worth a combined 6.52 cents per share. This was worth a yield of approximately 24.1% (based on its pre-distribution share price of around 27 cents). The dividend was paid out on 30 November, where the stock briefly fell 7 cents or -25.9% but closed the session down just -14.8% (a net gain for holders and loss for shorts). Over the next five days, the stock fell another -17.4%, bringing pre-payout shorts back in the money.