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Why the Syrah Resources share price has rocketed 25% this week

The Syrah Resources Ltd (ASX: SYR) share price has been under pressure for a very long time.

The Aussie graphite miner was valued at over $2.00 per share back in January but fell as low as $0.35 per share just last week.

Syrah shares are more than 25% higher since Monday, but is this a sign the tide is turning or just a “dead cat bounce”?

Why the Syrah share price has jumped this week

The Syrah share price closed 6.10% higher at $0.44 per share yesterday as this week’s positive price momentum continued.

Perhaps the most astonishing thing is that Syrah’s 25.71% gain since Monday has come without any market sensitive announcements from the mining group.

Syrah is regularly featured among the most shorted stocks on the ASX with roughly 17 per cent of the company’s shares being sold short. This is significant, as it shows that there’s a lot of money betting against the Aussie graphite miner.

Syrah’s short sellers are under pressure this week as Australia’s largest super fund doubled down on the Syrah share price.

AustralianSuper has been a big supporter and cornerstone investor in Syrah. According to an article in the Australian Financial Review (AFR) this week, that support looks set to continue.

Syrah shares were down by a whopping 94% since June 2016 earlier this week amid operational setbacks and weak pricing.

But AustralianSuper is standing by Syrah and has been key to the company’s ability to raise equity in recent years. The super fund has also provided debt capital to the graphite miners as it looks to support Syrah.

The group’s shares climbed higher this week as investors have been buoyed by AustralianSuper’s support.

Foolish takeaway

When you have a $130 billion super fund in your corner, that’s not the worst position to be in.

I’m sure there would be a few restless short sellers this week following the 25% Syrah share price rise.

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Motley Fool contributor Kenneth Hall owns shares of Syrah Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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