The Short Report – 19 Sep 2019

Weekly Reports | Sep 19 2019

See Guide further below (for readers with full access).

Summary:

Week ending September 12, 2019

Last week saw the ASX200 track a choppy path gradually higher.

There are a few reds and greens in the table below but nothing remarkable. Two stocks saw moves of over one percentage point or more, both residing in what we might call the “battery space”.

One is graphite Miner Syrah Resources ((SYR)), which rose to 15.7% shorted from 14.5%. The other is lithium miner Pilbara Minerals ((PLS)), which fell to 7.8% from 9.6%.

The Pilbara Minerals story is straightforward – the company raised capital, thus providing shorters an opportunity to buy back at a discount. There’s a bit more to the Syrah story nonetheless. See below.

Otherwise we might point out that as of last week, Tasmanian dairy product producer Bellamy’s Australia ((BAL)) was 15.0% shorted. The next day, a Chinese state-owned company made a takeover offer and the stock jumped 55%. There would have been some blood on the short-side floor.

As to whether the government will let Beijing takeover our baby formula industry to avoid having to pay the margins, at what we might call a somewhat “sensitive” time in Sino-Australian relations and the public’s perception of them, is another matter.

Weekly short positions as a percentage of market cap:

10%+
NUF    17.7
ORE    16.2
GXY   16.0
SYR    15.7
ING     15.3
BAL    15.0
NXT    14.7
JBH     13.4
GWA  11.7
HUB   11.1
BWX   10.4
DMP   10.3


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