Short Selling: Flight Centre and Elders shorts rise, Develop Global shorters exit
Short interest in Flight Centre is ticking meaningfully higher for the first time since April 2022.
Source: Shutterstock
Mentioned
KEY POINTS
- Flight Centre's short interest nears 10-month highs amid concerns of normalising growth and rising competition
- Elders issued a first-half FY24 earnings downgrade last week and shorters have positioned for further downside
- Mineral Resources sold its entire Develop Global stake, which has been viewed as a positive for the emerging green metals producer
Welcome back to the Short Seller Series – A recap of the most heavily shorted stocks on the ASX as well as those experiencing significant changes to short interest over the past week.
Short selling data is four days behind today's date because reporting is not mandatory until three business days after the trade. The tables below compare:
Week-on-week (WoW % Chg) changes between 2 and 9 April
Month-on-month (MoM % Chg) changes between 5 March and 9 April
Most Shorted
Ticker | Company | Prev Month | WoW % Chg | MoM % Chg |
|---|---|---|---|---|
Pilbara Minerals | 20.63% | -0.06% | -0.06% | |
IDP Education | 11.86% | 0.54% | 2.81% | |
Syrah Resources | 15.94% | 0.59% | -1.61% | |
Flight Centre | 10.42% | 0.96% | 0.59% | |
Liontown Resources | 8.79% | -0.03% | 1.28% | |
Core Lithium | 8.37% | -0.08% | -0.01% | |
Genesis Minerals | 8.78% | -0.19% | -1.31% | |
Bank of Queensland | 6.20% | 0.39% | 1.04% | |
Lifestyle Communities | 6.75% | 0.15% | 0.49% | |
Sayona Mining | 7.55% | -0.05% | -0.37% |
Key themes and takeaways:
IDP Education remains the #2 most shorted stock for a second week: The company has not released any market sensitive news since its half-year FY24 results on 14 February. The market continues to focus on the raft of regulatory risks and visa weakness affecting key geographies including Australia, Canada and the UK. The most notable being Canada's international student cap, which has been set at approximately 360,000 international student permits for 2024 (or down 35% on 2023 intakes). IDP shares are down 20% year-to-date and 42% in the past twelve months.
Flight Centre's short interest nears 10-month highs: Flight Centre's short interest was in a steady downtrend from April 2022 highs of 18% to February 2024 lows of 8.0%. The stock has traded relatively flat in the short term, up 0.8% in the past month and up 4% year-to-date. Earlier this month, Goldman Sachs downgraded the stock to a Sell (from Neutral) with a $18.30 target price. The bearish thesis was based on three key points: 1) Corporate transaction volume growth has normalised; 2) increasing competition in the high-margin SME segment and 3) consensus expectations for the company's corporate margins are too high.
Flight Centre short interest chart (Source: Shortman)
Rising Shorts
Key themes and takeaways:
Elders' trading update: Elders provided a first-half FY24 trading update on 8 April, citing subdued client sentiment following an El Nino declaration, lower crop protection prices and 'significantly' lower livestock prices. The company downgraded its full-year EBIT expectations to $120-140 million vs. $170 million consensus. On the same day, short interest ticked to 3.72% from 2.15% in the previous day. Interestingly, the stock has bounced 13.6% since the earnings downgrade.
%20Share%20Price%20-%20Market%20Index.png)
Elders 3-month price chart (Source: Market Index)
Most Covered
Ticker | Company | Prev Month | WoW % Chg | MoM % Chg |
|---|---|---|---|---|
Develop Global | 2.74% | -1.91% | -1.01% | |
Nanosonics | 4.79% | -1.91% | -0.54% | |
Chalice Mining | 7.13% | -1.04% | -1.35% | |
Emerald Resources | 0.59% | -0.80% | 2.97% | |
Beach Energy | 1.28% | -0.62% | -0.20% | |
Australian Clinical Labs | 7.62% | -0.58% | -1.22% | |
Lynas Rare Earths | 7.17% | -0.50% | -0.63% | |
Netwealth Group | 1.43% | -0.49% | -1.03% | |
Cettire | 2.15% | -0.38% | -0.04% |
Key themes and takeaways:
MinRes sells Develop Global stake: MinRes offloaded its entire stake in Develop Global on Monday, 8 April. The 31.5 million shares were sold at $2.00, representing approximately 13% of the company. The sale removes a large overhang on Develop Global, particularly as copper prices show signs of strengthening. Analysts have long recognised it as a non-core holding for MinRes.
