The Syrah Resources Ltd (ASX: SYR) share price was a quiet achiever in yesterday’s trade.
The ASX 300 miner’s shares jumped 12.84% higher to $0.62 per share despite no market-moving news being announced.
So, what’s driving the Syrah Resources share price and could 2020 be the time to buy?
Why the Syrah Resources share price is racing higher
Syrah has consistently been among the ASX 300’s most shorted shares for months, if not years.
According to ASIC’s weekly report, Syrah’s short interest is currently sitting around 16%. That means 16% of the graphite miner’s shares are being borrowed to sell the stock short right now.
However, that 16% is lower than it has been in recent times, which may explain yesterday’s Syrah Resources share price jump.
As short sellers cash out of their position, for either a profit or a loss, that means more buying of a company’s shares to offset their position and therefore more “demand” for the stock.
Some of Syrah’s fellow most-shorted ASX 200 shares have also been rocketing higher to start the year.
The Orocobre Limited (ASX: ORE) is leading the way with 33.21% in year-to-date (YTD) gains, while Galaxy Resources Limited (ASX: GXY) is up 27.96% in 2020.
It may be no coincidence, given lithium and graphite are key inputs for battery technologies. Investors in these companies have been waiting for an electric vehicle or battery storage boom to cash in on their investors.
Thus far, the Syrah Resources share price has plummeted lower alongside Orocobre and Galaxy.
But if demand and investment can pickup in 2020, particularly with the renewed climate change debate around the bushfires, these ASX 300 companies could capitalise.
Should you buy the graphite miner’s shares?
I’m a long-term shareholder of Syrah Resources because I like the resources they control and their long-term outlook.
The recent support shown by cornerstone investor AustralianSuper is also a big bonus in keeping the company’s capital structure intact.
However, I think 2020 will be another volatile year for the Syrah Resources share price. That may not suit every ASX investor’s portfolio and investment goals for the year, so tread carefully.
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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.