The Short Report – 29 Sep 2022

Weekly Reports | Sep 29 2022

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

Summary:

By Greg Peel

Week Ending September 22, 2022.

Last week the ASX200 fell out of bed in the wake of the shock US August CPI report and a 100 basis point increase in Fed terminal rate expectations from the FOMC, accompanying another 75 point hike.

The subsequent surge in US bond yields flowed through to Australian yields, causing particular havoc among bond-proxy sectors as well as growth stocks.

There has been at least some reprieve today.

Looking at the table below, we see short positions remain stubborn at the top but all hell broke loose towards the bottom. Few stocks were spared share price routs.

While the 8% and 9% shorted brackets largely emptied out, the mix of red and green lower down suggests shorters were picking which stocks were worth taking profits in, and which were worth moving in for the kill. There were some big changes in positions.

Zip Co ((ZIP)) shorts fell to 7.9% from 9.4%. City Chic Collective ((CCX)) fell to 6.6% from 8.5%. Clinuvel Pharmaceuticals ((CUV)) fell to 5.9% from 7.0%.

Janus Henderson shorts fell to below 5% from 6.9%. EML Payments ((EML)), which the prior week had seen a fall to 6.0% from 7.1%, also fell out of the table.

Janus Henderson bucked the fund manager trend given short increases for Magellan Financial ((MFG)) and Perpetual ((PPT)). Domino’s Pizza only appeared in the table last week and moved up a bracket.

While profits were clearly taken among 5-6% shorted stocks, entering the table were Core Lithium ((CXO)), Paladin Energy ((PDN)) and Novonix ((NVX)), suggesting a theme, along with NextDC ((NXT)) and Alumina Ltd ((AWC)).

It will be interesting to see next week how these stocks fare if today’s rally is the start of something more sustainable.

Weekly short positions as a percentage of market cap:

10%+
FLT     15.1
BET     13.8
LKE    10.4
SQ2     10.4


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