Short selling: The most shorted and targetting stocks on the ASX - Week 40

Welcome back to the Short Seller Series, where we recap the most shorted stocks on the ASX, along with those experiencing a notable rise and fall in 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 table below compares short interest changes between 20 September and 27 September.

Most Shorted Stocks

Key changes and takeaways

Pilbara Minerals remains the most shorted stock on the ASX: There's been no reprieve for the lithium sector, with the latest update from Fastmarkets citing:

• "Market participants attributed the drop in futures prices to the continued weakness in demand for lithium salts from the battery sector, as well as persistently bearish sentiment."

• "Due to weak demand for hydroxide and large inventories, multiple lithium producers were reportedly offering bigger discounts to their long-term customers to boost lithium hydroxide sales, sources told Fastmarkets."

Liontown shorts spike to 5-month highs: A $142.8 million cross-trade was reported by the AFR on October 3 and Gina Rinehart was once again, the suspected buyer. Liontown shares are currently trading around the $3.00 level, in-line with the $3.00 bid it received from Albemarle in early September. So why might investors be shorting Liontown ahead of a potential takeover?

• Takeover falls through: Gina could theoretically block the bid from going through. This could expose Liontown shares to some downward pressure. Its shares are relatively unchanged in the past month while a peer like Pilbara Minerals is down around 15% over the same period.

Where are Shorters Covering?

The below table ranks stocks by the largest week-on-week % fall in short interest.

Key themes and takeaways:

• Relatively incremental changes among heavily sold off stocks: Stocks like ResMed, Elders, Renascor Resources and Perpetual are trading near multi-year lows.

Where are Shorters Targeting?

The below table ranks stocks by the largest week-on-week % rise in short interest.

Key themes and takeaways:

• AMA Group's 'interesting' retail entitlement offer: AMA Group successfully raised $35 million at 7.5 cents a share or a 37.5% discount to its pre-raise levels. It also offered a Retail Entitlement Offer to raise a further $14.9 million, which was open to shareholders through to Monday, 25 September. But by then, AMA shares had already slumped to around 4 cents. So why would anybody want to participate in the offer (for 7.5 cents) when they can just buy shares on market for 4 cents? The company received 79 applications for the offer, for a mere $300,000.

• Alligator Energy shorts spike post capital raising: Shares in the uranium explorer experienced an uptick in shorts after a successful $25.5 million placement on 20 September. The placement was made at a 23.5% discount to its pre-raise close and proceeds will "enable Alligator to enhance work programs at the Samphire Uranium Project during 2024, where key upcoming activities include a feasibility study and mining lease application."

• Incremental upticks across the battery metal sector including names like Sayona Mining, Lynas Rare Earths and Arafura Rare Earths.