Buy Hold Sell: 3 of the ASX’s most-shorted stocks (and 2 long-term compounders)

Total short selling on the ASX has been on the rise since the start of the new financial year, with short interest lifting 53% since then. 

That's according to ShortMan, which tracks the 100 most-shorted stocks on the ASX. As it stands today, there are 14 stocks with a short interest greater than 8%. This means that 8% or more of the shares on a company's register are currently being shorted. 

Hedge fund managers, or long/short funds, use shorting to target (and ultimately benefit) from a stock's falling share price. They rarely target stocks tracking on a steady upwards trend (as this can lead to a short squeeze, as we saw with GameStop). 

According to QVG Capital's Josh Clark, anything above 8% should be considered "big". Investors should keep this in mind because stocks with large short positions are often more volatile and sensitive to market news and announcements. This is true for both positive and negative news - as we have seen in recent weeks, with many of the ASX's most-shorted stocks surging off their lows amid the recent market rally.

So in this episode, Livewire's Ally Selby was joined by Clark and ClearLife Capital's David Moberley for their analysis of three heavily shorted stocks. 

Plus, for a spoonful of spice, they also name one stock with enviable compounding potential over the long term. 

Note: This episode was filmed on Wednesday, November 9th 2022. You can read an edited transcript below:

https://www.livewiremarkets.com/wires/buy-hold-sell-3-of-the-asx-s-most-shorted-stocks-and-2-long-term-compounders