Which ASX stocks are shorters targeting and covering — Week 36

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 24 August and 30 August 2023.

Most shorted stocks

What’s changed

• Flight Centre remains the most shorted stock on the ASX

• Pilbara Minerals' short interest jumps 1.0%. The stock was down as much as 15% following its FY23 results on 24 August. It's FY24 volume guidance was 4% below Citi expectations and $875-975m capex (vs. $530m consensus) was a surprise

• Elders remains the third most shorted stock, with short interest rising after a disappointing FY23 guidance update on 21 August

• Appen experienced an uptick in short interest after the stock nosedived 32% on the day of its 1H23 results on 28 August. Back in May, management said "we expect an improvement on 2H FY23 revenue relative to revenue achieved in 1H FY23." While the results flagged that "2H FY23 revenue to be closer to 1H FY23 revenue."

Where are shorters covering?

Key themes and takeaways:

• Shorters taking profits: Beaten up names like Imugene, Alumina, Novonix and APA Group have experienced a fall in short interest for the wrong reasons. The stocks are trading near 52-week lows (or worse) and shorters are happily unwinding their profitable positions.

• A closer look at Magellan: Magellan's short interest has tumbled from around 4% at the beginning of August to around 1.0%. The company's FY23 results were mostly in-line with analyst expectations but FY24 opex guidance of $95-100m was well-below Goldman Sachs forecasts of $128.4m. The stock rallied 13.3% on results day.

Stocks with rising short interest

Key themes and takeaways:

• Myer shorts burned: Myer shares are up almost 10% since 29 August, when the AFR reported a block trade from Premier Investments worth $16 million or 3% of the company. The size of PMV's stake has grown to just under 29%, which means it cannot buy more than 3% of the company without making a takeover bid. Let's see if shorts unwind next week.

• Bearish on lithium: Shorts continue to rise for two opposing lithium names, that being the bellwether Pilbara Minerals and the beaten up Sayona. Recent reports from Fastmarkets flag more weakness in Chinese lithium prices, attributed to "ongoing weak demand and bearish sentiment, which forced lithium producers to make concessions, despite the strength in the spot prices a week earlier."

• Rising Domino's shorts: Domino's shorts have climbed to 6.4% after a rather strange reversal on the day of its full-year results on 23 August. The company's FY23 revenue and earnings missed analyst expectations but noted an encouraging start to FY24, with network sales growth of 12.6% (first 7 weeks). The stock finished the session up 11.8% (after falling 5.3% in early trade). Perhaps shorts are rising in anticipation that the run will be short lived.