The 10 most shorted ASX stocks plus the biggest risers and fallers – Week 35

Welcome back to the Short Seller Series – A recap of the most heavily shorted stocks on the ASX and 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 will compare:

• Week-on-week changes between 20 and 27 August 2024

• Month-on-month changes between 31 July and 27 August 2024

Most Shorted

Interesting takeaways:

• Pilbara Minerals and IDP Education remain the two most shorted stocks on the market. The two stocks have retained the top spots since early February

• Pilbara Minerals' short interest has pulled back to a six-week low. The company's FY24 result (reported 26 Aug) reported softer-than-expected EBITDA and operating cash flow (8% and 11% below consensus) due to low lithium prices. Lithium spodumene is currently trading at US$775 a tonne, according to the Shanghai Metal Market.

Rising Shorts

Interesting takeaways:

• Short sellers are targeting reporting season losers including Inghams, Corporate Travel Management and A2 Milk

• Missing earnings expectations is a bad omen for stocks. In the past 16 reporting seasons, companies that missed earnings expectations saw their stocks down an average 6.3% on the day of the result and down an average 8.4% four months later, according to Bell Potter's Richard Coppleson.

• Inghams shares tumbled 20% after its FY24 result missed on all fronts plus a weaker-than-expected guidance and revised supplier agreement with Woolworths. The company's underlying net profit for FY24 was 8% below analyst expectations, the total FY24 dividend was a 3.8% miss and FY25 EBITDA guidance was a 6% miss at the midpoint. The new multi-year agreement with Woolworths will also result in a 1-3% decline in poultry sales compared to the previous period.

Most Covered

Interesting takeaways:

• Westgold's short interest continues to unwind from a peak of 12.6% in late July.

• Short sellers have slightly eased their bets against battery metal stocks including Pilbara Minerals, Sandfire Resources and Lynas Rare earths

• Charter Hall shares rallied 15.8% after reporting a largely in-line FY24 result. Its FY25 guidance surpassed market expectations, supported by an anticipated recovery in property valuations and volumes. Charter Hall is also the REIT most linked to bond yields, according to Morgan Stanley. "Its PE multiple has a -0.77 correlation vs. Australian 10-year bond yields ... this means that as bond yields decline, the multiples of these stocks generally re-rate upwards," the analysts said in a note last year. The Australian 10-year yield is down around 35 bps since late July.