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Australia’s 3 most shorted stocks examined

We examine three of the most shorted stocks on the ASX, according to ASIC data as of 28 April.

Short wrap Source: Bloomberg

Myer share price: change remains the only constant

Caught between a tectonic shift in consumer behaviour and a global pandemic, it should come as little surprise that a high percentage of the iconic Australian retailer’s stock is currently held short.

A quick glance between decades illustrates that consumer shift with significant clarity. For example, in FY10 Myer reported total revenue from sales of goods at $2,825 million against an operating gross profit of $1,317 million. By FY19 however, Myer’s revenue had not only not grown, it had slumped, with the retailer reporting revenue from goods sold at $2,345 million against operating gross profits of $1,162 million.

Myer’s diluted earnings per share (EPS) fared even worse over the decade, falling to 3.0 cents per share in FY19 from 12.1 cents per share in FY10.

The coronavirus pandemic has also compounded these issues, with Myer temporarily closing all of its physical stores until at least 11 May. Myer’s online businesses remain open.

13.83% of Myer's stock is currently held short.

Galaxy Resources share price slumps as lithium demand wanes

As oversupply issues continue to plague global lithium markets, in the last year, the share price the Australian-based lithium miner Galaxy Resources has fallen over 50% – to last trade at 73 cents per share.

Though lithium prices almost tripled between 2015 to 2018, according to Bloomberg, the price of the commodity – as well as stocks such as Galaxy – have since tapered off, as the electric vehicle revolution fails to take off as quickly as some were expecting.

With that in mind, according to S&P Global, Platts:

‘2020 will be a key year for the future long-term lithium supply: if some new projects don't find the required financing in the coming months, the current oversupply is likely to suddenly shift into shortage in a few years as electric vehicles spread out global.’

13.62% of Galaxy Resources stock is currently held short.

Speedcast share price: a tangled story

Speedcast International was first placed in a trading halt and then suspended from official quotation in February 2020. This went on into March, where the company finally released its preliminary FY19 report.

The results here were dour, with the company booking an NPAT loss of US$459.8 million. Subsequently Speedcast requested that its suspension be extended at the end of March, before announcing in late-April that it would be aiming to recapitalise its balance sheet through chapter 11 proceedings.

Today, in another twist to this ever-evolving story, it was revealed that 'the United States Bankruptcy Court has made an interim order imposing certain restrictions on trading in the Company's shares , in particular, on proposed transactions by a “Substantial Stockholder”.’

Though Speedcast’s shares currently remain suspended from official quotation, prior to that, many investors were betting on the company’s decline, with 13.17% of its issued stock held short.

In the short period that Speedcast’s stock was tradable in CY20, its share price fell 16.84%.

UPDATE: the latest ASIC short sale report puts News Corps A Non-voting CD1 1:1 a shade ahead of Speedcast in percentage terms, with a 13.2% short interest.

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