Short Selling: Webjet shorts are on the rise, Syrah short interest drops to six month low

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 19 and 25 March

• Month-on-month (MoM % Chg) changes between 27 February and 25 March

Most Shorted

Key themes and takeaways:

• Pilbara Minerals and Syrah Resources remain the top two most shorted stocks on the market since late November 2023

• Relatively incremental week for changes among the top shorted stocks (we'll touch on a bit later)

Rising Shorts

Key themes and takeaways:

• Webjet shorts have hit five month highs after an almost 30% share price rally in March. The bulk of this move was driven by the company's WebBeds Strategy Day Investor Presentation on 21 March, which outlined plans to reach $10 billion in total transaction volumes (TTV) at 50% EBITDA margins by FY30 (FY23 TTV: $4.35 billion at 49.5% EBITDA margin). Analysts highlighted WebBeds' organic growth potential driven by technological advancements and structural shifts in distribution, which could lead to significant market share gains against smaller competitors.

• Electro Optic Systems' short interest hit a seven month high (off a low base) after the company raised $35 million (25 March) to invest in long-lead items such as cannons and other items. The new shares were issued at $1.70 per share or an 18.3% discount to pre-raise levels

• Arafura shorts remain relatively unphased after the stock surged 76.9% on 14 March after the company secured conditional Commonwealth Government approval for a debt financing package of US$533 million. The stock has eased 25% from recent highs but still 40% higher from pre-financing package levels.

Most Covered

Key themes and takeaways:

• Syrah's short interest has retreated to levels not seen since October 2023. Short interest started to unwind around 5-6 days after the company's $98 million capital raising on 15 March. The raise was conducted at 55 cents per share or a 21.4% discount to pre-raise prices. There have been some interesting developments/data surrounding graphite markets. Here are the most interesting takeaways from a recent Fastmarkets report.

  • China's Jan-Feb graphite exports have plunged after the implementation of export controls on certain graphite-related products from 1 December 2023. Total exports of flake and spherical graphite have dropped 77.7% and 65.5% respectively in the first two months of the year The report suggests the export controls have had a limited impact on short-term graphite supply

  • “There is sufficient capacity of natural flake graphite for the rest of the world, but the major concern for downstream anode and battery makers could be the processing capacity for uncoated spherical graphite on the natural side,” a US-based said.

  • “Consumers who used to source from China have been trying to seek other sources to reduce their dependence on Chinese materials, and the shift has been accelerated by China’s export control policy on flake graphite, with more inquires being received for materials from Africa,” a graphite producer in Africa said.

• Slight pullback in short interest relating to various themes such as uranium (Aura Energy), gold (Bellevue Gold) and agriculture (Elders)