Short selling: Which ASX stocks are investors covering and shorting — Week 29

Welcome back to the Short Seller Series, where we recap the most shorted stocks on the ASX as well as those experiencing notable rises, or falls, 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 data below refers to short interest changes for stocks between 5 and 12 July.

Top 10 Most Shorted Stocks

What's changed

Syrah Resources enters the top 10. This has been quite a successful short as the stock tumbled 16.3% on Tuesday, 18 July after another disappointing quarterly result. The company generated only $9.5 million in sales for the quarter with operating outflows of $29.5 million.

"Balama production constrained by maximum inventory positions and lower natural graphite sales," the company said in a statement.

Syrah Resources 12-month price chart (Source: Market Index)

Where are shorters going?

Interesting takeaways

• Elders shorts have been steadily rising from around 3.0% in early June. The volatile agricultural backdrop has weighed on earnings, with the company posting a 38% drop in half-year FY23 earnings back in May. Elders guided to full year earnings between $180 million to $200 million, which is below consensus expectations of $206 million. The stock has bounced almost 20% from June lows (still down 30% year-to-date). Shorts may be reloading ahead of reporting season.

• Retailers like JB Hi-Fi and Baby Bunting experienced an uptick in shorts. JB Hi-Fi has held up relatively well despite all the negative retail trading updates we've seen in the past two or so months. The stock is up 8.5% year-to-date and up 9.0% in the last twelve months. Whereas Baby Bunting has been sold off rather aggressively, down 37% year-to-date and down 62% in the past twelve months.

Where are shorts covering?

Interesting takeaways

Some short covering post/in the lead up to major announcements.

• Megaport (+33.8% on 11 July): Upgraded its FY23 EBITDA to $19-21 million from previous guidance of $16-18 million.

• Johns Lyng (-11.9% on 22 June): Upgraded FY23 earnings but BAU growth of 23% year-on-year fell short of expectations.

• PointsBet (+21.6% on 19 June): Received an improved takeover from Fanatics Betting of US$225 million for PointsBet's US business

• Costa Group (+13.0% on 3 July): Received a non-binding indicative takeover bid from Paine Schwartz Partners at $3.50 per share