The ASX stocks are shorters targeting and covering - Week 38

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 7-13 September.

Most Shorted Stocks

Key week-on-week changes:

• Pilbara Minerals remains the most shorted stock on the ASX for a second consecutive week. This is the first time on record that short interest in the stock has surpassed 10%.

• Syrah Resources climbs to #2. Short interest continued to climb after the stock experienced a short-lived 7% rally to 61 cents on 11 September (received US$150m conditional loan commitment for its Balama Project). Its down 16% since the news to a near three-year low of 51 cents.

Where are Shorters Covering?

Key themes and takeaways:

• More profit taking: Shorts continue to unwind in names that have been sold to oblivion in recent weeks/months. Shares in AMA Group are down 61% in the past month after it kicked off a $55 million capital raise on 7 September at 7.5 cents per share (37.5% discount to last close).

AMA 12-month price chart (Source: Market Index)

Where are Shorters Targeting?

Key themes and takeaways:

• Resources under fire: There's a long list of battery metal stocks experiencing a week-on-week uptick in short interest and it extends to more than just lagging names like Vulcan Energy and Core Lithium. We're seeing shorts rise in household names like Pilbara Minerals and IGO. Could this reflect a) the lithium party is over, b) an incoming short squeeze or c) a crowded trade (possibly due to the lack of options when it comes to shorting lithium).

• Shorting into weakness: Plenty of stocks on the list have fallen off a cliff for various reasons such as Tietto Minerals (disappointing guidance), Orora (capital raising) and IPH (solid FY23 results but weak AU volumes and disruptions in China).

• An unloved regional bank: Bank of Queensland is arguably one of the most unloved banks out there. The latest commentary from Morgan Stanley flagged "we believe the BOQ turnaround will continue to be challenged by weak mortgage growth, downward pressure on margins, and re-investment associated with its multi-year transformation." An Underweight rating was retained along with a $5.60 target price ($5.86 at Tuesday, 19 September close).