Which ASX stocks are shorters targeting and covering - Week 37

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 30 August and 7 September.

Most shorted stocks

What’s changed

• Pilbara Minerals has replaced Flight Centre as the most shorted stock on the ASX.

• Lake Resources is out of the top ten after shorts eased to 5.89% from 8.30% a week ago. This might reflect some profit taking as the stock is down 78% year-to-date to a 32-month low.

Where are shorters covering?

Key themes and takeaways:

• Shorters taking profits: Names including 29Metals, Lake Resources, Novonix, Terracom, GWA Group and Ventia Services have struggled this month.

29Metals, Lake Resources, Novonix, Terracom, GWA Group and Ventia Services share price performance since 1 September 2023

Stocks with rising short interest

Key themes and takeaways:

• A focus on troubled miners: Shorts are building across various battery metal and gold-related names that have faced various risks with bringing projects into production. This includes:

  • Tietto Minerals (5 Sep): Abujar Gold Mine in Cote d’Ivoire flagged higher costs, lower production and lower grades.

  • IGO: Ongoing struggle with Kwinana Lithium Hydroxide train 1 ramp up. Management expects it to reach 50% of nameplate capacity by the end of 2023, down from its previous target of 70%.

  • Vulcan Energy: More broadly speaking, brine and direct lithium extraction plays have struggled to progress key studies.

• Orora’s massive raise: The $2.3bn Orora raised $1.1bn at $2.70 per share (21.3% discount to pre-raise close) earlier this month to fund its acquisition of premium bottle maker Saverglass. Analysts have been rather reserved about the acquisition given the modest ~2% earnings accretion after synergies and dilution.

  • “The Saverglass acquisition comes at a fair multiple with modest EPS accretion after synergies. We understand the attraction but question whether a more complementary opportunity may have been a better fit,” Morgan Stanley analysts said in a note last week.

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