The Short Report – 17 Dec 2020

Weekly Reports | Dec 17 2020

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

Summary:

Week ending December 10, 2020

Last week saw the ASX200 end an unbeaten seven-day rally, after the Dow hit 30,000 on news of another vaccine (AstraZeneca), Janet Yellen’s nomination as Treasury Secretary, and an apparent, sort of, not quite concession from Trump. Border re-openings domestically added to sentiment.

Profit-taking kicked in on the last day.

The market has now begun to wind down ahead of Christmas. The ASX200 is still doing its thing but activity is slowing, evident both in diminishing broker research and another week of not much change in short positions.

All movement on the table below represents bracket creep, except for the one move of one percentage or more. The last battery-related miner has left the building.

Lithium miner Galaxy Resources ((GXY)) fell off the 5%-plus shorted table last week from 6.4%. Miners of lithium and graphite in particular have suffered through a boom/bust cycle of supply building way ahead of actual demand, just as rare earths had done previously and before that, uranium. For quite some time, Galaxy, along with peers Orocobre ((ORE)) and Pilbara Minerals ((PLS)) and graphite miner Syrah Resources ((SYR)) jealously guarded the top spots in the 10% shorted club, often up to and over 20% shorted.

Cobalt miner Metals X ((MLX)) also hung around at the lower end for quite some time.

But with all talk of growing EV demand, and commitments across the globe to zero emission targets, the battery-related miners have been on the move again more recently, and that has led to a gradual reduction in short positions.

Other moves worthy of note last week were those of seafood farmer Tassal Group ((TGR)), up to 9.8% from 9.0%, and biotech Avita Therapeutics ((AVH)), up to 8.6% from 7.8%.

While Tassal peer Huon Aquaculture ((HUO)) is having all the problems, shorters are no doubt anticipating Beijing will soon add salmon and prawns to its trade war list alongside lobsters, given we are not backing down to the bully.

Avita had been tipped to exit the ASX200 and so it came to pass in the S&P/ASX rebalance announcement last Friday.

No Movers & Shakers this week.

This is the last Short Report for 2020. The Short Report will now pull on the shorts as it takes a short break, returning next year.

So long.


Weekly short positions as a percentage of market cap:

10%+

WEB   15.0
WSA   10.8

No changes

9.0-9.9

TGR

In: TGR           Out: MYR


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