Which ASX stocks are being shorted the most this week?

Welcome back to the Short Seller Series – Where we recap the most shorted stocks on the ASX as well as those experiencing a notable rise and fall in short interest over the past week.

Short selling data is reported four days behind today’s date as reporting is not mandatory until three business days post trade. The data below refers to short interest changes for stocks between 10-18 May.

Most shorted stocks

What’s changed

• Appen rises to the second most shorted, with short interest up from 9.05% a week ago and 5.39% two weeks ago

• Zip short interest falls sharply but remains elevated

• Overall, only incremental changes, all the names in the top 10 remain the same compared to last week

Where are shorters going?

Elders: Shares fell 13.3% to a fresh 3-year low on Monday, 15 May. Half-year FY23 results flagged a 45% decline in underlying profit after tax, impacted by “softened livestock trading conditions, weaker crop input prices and unseasonably wet weather.” 

Tabcorp: Tabcorp’s retail wagering licence in Victoria expires in August 2024 and the company is expected to be awarded a renewal in mid-2023. Shorts may be positioning for a potential negative outcome, where Tabcorp loses the license and becomes an online-only corporate bookmaker in Victoria.

Pilbara Minerals: PLS shares rallied almost 45% between 13 April and 19 May. Short interest in the stock has climbed to levels not seen since June 2020. Are investors expecting the lithium bounce to run out of steam?

29Metals: 29Metals provided a strategic update on the recovery of its Capricorn Copper Project and outlook for Golden Grove on Tuesday. The key concern among analysts is the need for additional capital to restart production and unlock growth. The stock is down 17% in morning trade on Wednesday and down 70% in the past twelve months.

Where are shorts covering?

Mincor: Wyloo Metals offered to acquire Mincor at $1.40 per share in early April. The takeover is likely to go ahead given the Board’s recommendation and Wyloo’s substantial stake in the company  (70.7% as at 19 May). Mincor has been trading at $1.40 since 5 April and shorters likely see no reason to continue betting for any downside.

Vulcan Energy: Vulcan shorts spiked to 7.9% on 5 May – The day it completed a $109 million capital raising at $5.10 per share (17.3% discount to previous close). Short interest has been progressively declining, which may reflect profit taking from shorters. The stock is down around 25% since its close on 5 May. 

Zip: Zip rallied 13% between 10-18 May (the dates that our short interest data refers to). It will be interesting to see what happens after the news on Monday about regulatory reform for the BNPL sector.  

Allkem: Allkem is set to merge with Livent by the end of the year. According to TD Securities, the NYSE-listed Livent trades at “almost double the 2024e EBITDA of Allkem”. The company’s primary listing is on the NYSE, so could the merger drive a bit of a re-rate for the Allkem side of things?