Short selling: Liontown shorts topple, shorters double down on Pilbara Minerals and Syrah
Short sellers continue to pile into vulnerable battery metal names like Syrah and Pilbara Minerals.
Mentioned
KEY POINTS
- Pilbara Minerals and Syrah Resources remain the most short stocks on the ASX
- Liontown experiences a substantial drop in short interest after its $376m capital raise
- Shorts continue to pile into Syrah Resources despite the stock rallying ~50% in the past week
Welcome back to the Short Seller Series, where we delve into the most heavily shorted stocks on the ASX and highlight those with significant changes 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 compares short interest changes between 18 and 25 October.
Most shorted stocks
Ticker | Company | Short % | Prev | % Chg |
|---|---|---|---|---|
Pilbara Minerals | 16.19% | 15.23% | 0.96% | |
Syrah Resources | 14.09% | 11.58% | 2.51% | |
Genesis Minerals | 11.13% | 11.21% | -0.08% | |
Core Lithium | 10.77% | 10.04% | 0.73% | |
Appen | 9.68% | 9.32% | 0.36% | |
Flight Centre | 9.56% | 9.24% | 0.32% | |
Sayona Mining | 9.20% | 8.85% | 0.35% | |
Idp Education | 9.06% | 9.31% | -0.25% | |
Bank of Queensland | 9.03% | 8.59% | 0.44% | |
Insignia Financial | 8.05% | 6.80% | 1.25% |
Where are shorts being covered
Ticker | Company | Short % | Prev | % Chg |
|---|---|---|---|---|
Liontown Resources | 5.34% | 9.78% | -4.44% | |
Newcrest Mining | 0.20% | 1.89% | -1.69% | |
Alumina | 3.62% | 4.19% | -0.57% | |
Bluescope Steel | 1.27% | 1.76% | -0.49% | |
The Star Entertainment | 1.35% | 1.84% | -0.49% | |
Reliance Worldwide | 1.36% | 1.80% | -0.44% | |
G8 Education | 2.19% | 2.58% | -0.39% | |
Brainchip | 5.72% | 6.09% | -0.37% | |
Inghams Group | 1.56% | 1.93% | -0.37% | |
Light & Wonder | 1.47% | 1.82% | -0.35% |
Liontown shorts dropped after the stock resumed trading on Friday, 20 October following its $376 million capital raise at $1.80 per share (35.5% discount to previous close). To put things into perspective:
Short interest on Thursday, 19 October was 9.78% or 215.2 million shares (out of 2.2 billion total outstanding shares)
Short interest on Friday, 20 October was 7.63% or 168.1 million shares
Short interest hit a low of 5.35% on Wednesday, 25 October before bouncing to 5.84% on Thursday, 26 October
Liontown shares opened 34.05% lower at $1.84 when it resumed trading last Friday but rallied to a brief session high of $2.01 (or a 9.2% rally from the open). Short covering likely played a major role in this intraday rally.
Liontown intraday price chart on Friday, 20 October (Source: TradingView)
Stocks with rising short interest
Ticker | Company | Short % | Prev | % Chg |
|---|---|---|---|---|
Syrah Resources | 14.09% | 11.58% | 2.51% | |
Janus Henderson | 4.30% | 2.62% | 1.68% | |
Insignia Financial | 8.05% | 6.80% | 1.25% | |
Weebit Nano | 7.90% | 6.78% | 1.12% | |
Pilbara Minerals | 16.19% | 15.23% | 0.96% | |
Core Lithium | 10.77% | 10.04% | 0.73% | |
Elders Ltd | 7.03% | 6.34% | 0.69% | |
Unibail-Rodamco-Westfield | 2.10% | 1.43% | 0.67% | |
United Malt | 1.24% | 0.60% | 0.64% | |
G.U.D | 3.08% | 2.54% | 0.54% |
Syrah Resources shares surged around 50% since Thursday, 19 October in response to China's announcement of export controls on various graphite products. At the beginning of December, Chinese exports must obtain permits to ship graphite out of the country. Despite the significant share price rally, Syrah has only just hit a four-month high. Short positions have continued to rise, indicating:
Investors remain bearish on graphite fundamentals
Shorters are either still sitting on healthy profits or believe the export fears are overhyped
Earlier this week, I wrote a piece about what's next for graphite after China's export controls. In summary:
Back in August, China introduced similar controls to two niche metals: Gallium and germanium. The two metals are key materials for the production of electronics, EVs and other applications such as defence.
"At the announcement, gallium prices saw a minor increase, and China's gallium and germanium exports soared to almost 14 tonnes in July, with germanium in particular doubling from June volumes, as overseas buyers rushed to secure supply before the restrictions came in,” the analysts said.
“While China's policy did not ban exports, in August, exports of germanium fell to almost 0 and gallium exports did fall to zero, leading to a temporary decline in gallium prices as domestic stockpiles rose.”
It was only ~1 month after the export controls that gallium and germanium prices started to experience a sustained upward move, rising approximately 60% and 6% respectively since the announcement.
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Source: Morgan Stanley
Could we see a similar scenario play out for graphite?
