Shorting a share is essentially making a bet that the company’s share price will decrease. Short selling occurs when an investor borrows a security and sells it on the open market, planning to buy it back later for less money and pocket the difference.
Here we take a look at the top 10 most short-sold stocks on the ASX right now.
1. Kirkland Lake Gold Ltd (ASX: KLA)
Kirkland Lake Gold is a gold mining company operating in Canada and Australia which produced 974,615 ounces of gold in 2019. Kirkland Lake Gold owns and operates 5 underground gold mines and 3 milling facilities across Canada And Australia.
The company completed its acquisition of Detour Gold Corporation on 31 January, which adds the Detour Lake mine located in Northern Ontario to Kirkland’s assets. The Detour Lake mine produces approximately 600,000 ounces of gold per year and the acquisition is expected to generate US$75 million – US$100 million in annual pre-tax synergies. More than 25% of Kirkland Lake Gold shares are currently short sold.
2. Galaxy Resources Limited (ASX: GXY)
Galaxy Resources is a mining company with lithium production facilities, hard rock mines and brine assets in Australia, Canada and Argentina. It wholly owns and operates the James Bay lithium pegmatite project in Quebec, Canada and the Mt Cattlin mine in Ravensthorpe Western Australia, which is currently producing spodumene and tantalum concentrate. Galaxy is advancing plans to develop the Sal de Vida lithium and potash brine project in Argentina. Currently, 18.72% of Galaxy Resources shares are short sold.
3. Syrah Resources Ltd (ASX: SYR)
Syrah Resources is a minerals and technology company that owns (and constructed) the Balama Graphite Project in Mozambique. The company is currently developing its downstream Battery Anode Material project in Louisiana, USA, through which it aims to establish a core ex-Asia battery supply chain position. Currently, 17.47% of Syrah Resources shares are short sold.
4. Orocobre Limited (ASX: ORE)
Orocobre is a lithium carbonate supplier and an established producer of boron. Orocobre is in the process of expanding its Olaroz lithium facility in Argentina. The expansion will add 25,000 tpa of lithium carbonate production capacity, taking full production and capacity to 42,500 tpa of lithium carbonate for sale to industrial, technical and battery markets, positioning Orocobre as one of the world’s largest and lowest cost lithium chemicals producers. Orocobre also owns Borax Argentina S.A, a boron chemical and mineral producer with a 50-year production history. Currently, 13.62% of Orocobre shares are short sold.
5. Speedcast International Ltd (ASX: SDA)
Speedcast International is a communications satellite technology provider and the largest provider of remote communications and IT services in the world. In January, Speedcast was awarded a 12-month contract with the second largest mobile operator in Mexico. The mobile operator plans to use Speedcast’s cellular backhaul solution to expand its network and provide connectivity to sites where other types of communication are unavailable. Currently, 12.97% of Speedcast shares are short sold.
6. Nearmap Ltd (ASX: NEA)
Nearmap provides high resolution aerial imagery and uses artificial intelligence to provide data about the content of its images. On 30 January Nearmap announced its closing annualised contract value for 1H20 grew 23% on the prior corresponding period, with an annualised contract value of $96.6 million, up from $78.3 million in 1H19. Nonetheless, Nearmap revised its FY20 guidance, advising FY20 full year annualised contract value was expected to be $102 million to $110 million, down from previous guidance of $116 million to $120 million. Currently, 12.28% of Nearmap shares are short sold.
7. Inghams Group Limited (ASX: ING)
Inghams is a vertically integrated poultry producer operating in Australia and New Zealand with 345 facilities and farms across the 2 countries. Inghams also produces stockfeed for use in the poultry, pig, dairy and equine industries. Inghams was floated by private equity firm TPG in late 2016 at $3.15 per share, well below the $3.57 to $4.14 per share initially indicated. Inghams shares have risen 12% to $3.54 in the period since, well below the 30% increase recorded by the S&P/ASX 200 (INDEXASX: XJO) over the same period. Currently, 12.14% of Inghams shares are short sold.
8. GWA Group Ltd (ASX: GWA)
Gwa Group is a manufacturing company supplying building fixtures and fittings to households and commercial premises. Gwa Group is the owner and distributor of a range of brands including Caroma, Methven, Dorf and Clark. Currently, 12.06% of Gwa Group shares are short sold.
9. Costa Group Holdings Ltd (ASX: CGC)
Costa Group is Australia’s largest grower, packer and marketer of fresh fruit and vegetables. Costa Group’s produce is supplied to all the major Australian supermarket chains, as well as independent grocers and a range of food industry stakeholders. The company also exports to Asia, North America and Europe. Costa Groups’s operations include approximately 4,500 hectares of farmland, 30 hectares of glasshouses, and 3 mushroom growing facilities in Australia.
Costa Group also has strategic foreign interests with majority owned joint ventures covering 6 blueberry farms in Morocco and 4 berry farms in China. Costa Group has been negatively impacted by the ongoing drought, which has impacted berry operations in Northern New South Wales. Land leased by Costa for berry growing operations in southern New South Wales was also damaged in the January bushfires. Currently, 11.41% of Costa Group shares are short sold.
10. JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi operates the JB Hi-Fi brand in Australia and New Zealand, which focuses on technology and consumer electronics, and The Good Guys brand in Australia, which retails home appliances and consumer electronics. Shares in JB Hi-Fi have nearly doubled in value since the start of 2019, and are currently trading at $39.72.
JB Hi-Fi has yet to report its Christmas period sales, however overall slow consumer spending had little impact on 1Q20 results. JB Hi-Fi reported a 4.7% increase in sales for JB Hi-Fi Australia and a 3.8% increase in sales for JB Hi-Fi New Zealand. Currently, 11.22% of JB Hi Fi shares are short sold.
Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and Nearmap Ltd. 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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