Which ASX stocks are shorters targeting and covering — Week 33

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 2 and 9 August.

Most Shorted Stocks

What’s changed:

• Core Lithium, IDP Education and Flight Centre remain the top three most shorted stocks

• Lendlease falls out of the top 10 as short interest falls 0.6% week-on-week to 6.57%

Where are Shorts Covering? 

Key themes and takeaways:

• Heavy mineral sands producer Strandline Resources successfully raised $33.8m at $0.18 per share ($0.22 pre-raise close). The stock experienced a pullback in short interest (albeit from already very low levels).

• Shorts are unwinding in beaten-up battery metal stocks including IGO, Syrah and Core Lithium, all of which are down more than 20% in the past month.

• Shorts are easing ahead of a few upcoming results (which have now reported):

  • James Hardie (8 Aug +14.4%): Q1 earnings beat, upbeat full-year outlook and expectations that the positive housing market momentum will continue

  • Lendlease (14 Aug -2.8%): Mixed result, statutory loss of $232m due to retrospective UK Government action on residential buildings

  • Temple & Webster (15 Aug -4.5%): Revenue miss but profit beat, noted 1-Jul to 13-Aug revenue was up 16% against the prior period.

Where are Shorters Going?

Key themes and takeaways:

• A few lithium names are being targeted for various reasons:

  • Chinese lithium carbonate prices hit three-month lows of 255,000 yuan a tonne, with Fastmarkets reporting "limited interest in spot material."

  • “There were barely any spot trades over the past week, and the spot prices are still falling. The downtrend could persist into the near future,” a Chinese lithium producer source said.

  • Rumours about a potential Liontown capital raise, according to The Australian

• Mesoblast shares fell 57% on Friday, 4 August after the drug developer said the US FDA asked for more data for its flagship product, remestemcel-L. Between 7-9 August, the stock sold off another 25.5%.

• Shorts increased ahead of a few company results (which have now reported):

  • Block (4 Aug -5.8%): Shares tanked despite a double beat

  • Myer (8 Aug -14.0%): Preliminary FY23 sales rose 12.5% to $3.36bn below consensus expectations of $3.27bn.