Shorting a share is making a bet that the share price will decrease. Here we take a look at 5 companies attracting heavy interest from short sellers on the ASX according to ASIC.
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. 13% of Speedcast shares are currently short sold.
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.
Speedcast shares were placed in a trading halt last Monday, 3 February 2020, when the company announced the resignation of its CEO as well as a trading update. Shares are now in voluntary suspension pending the release of Speedcast’s FY19 results.
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. 12.06% of Kirkland Lake Gold shares are currently sold short.
The ASX gold miner owns and operates 5 underground gold mines and 3 milling facilities across Canada and Australia.
The company completed its acquisition of Detour Gold Corporation at the end of January, which is expected to generate US$75 million – US$100 million in annual pre-tax synergies. The acquisition 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.
Nearmap Ltd (ASX: NEA)
Nearmap provides high-resolution aerial imagery and uses artificial intelligence to provide data about the content of its images. 11.2% of Nearmap shares are currently sold short.
In late January, Nearmap announced its closing annualised contract value for 1H20 grew 23% on the prior corresponding period from $78.3 million to $96.6 million.
Nonetheless, Nearmap revised its FY20 guidance, advising FY20 full-year annualised contract value was expected to be $102 million – $110 million, down from previous guidance of $116 million – $120 million. As a result, the Nearmap share price crashed by around 30% on the day in response to the update.
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. The company also operates The Good Guys brand in Australia, which retails home appliances and consumer electronics.
11.05% of JB Hi Fi shares are currently short sold. Shares in JB Hi-Fi are up nearly 15% this year to $40.10 and have more than doubled in value since the start of 2019 when they were trading at $20.42.
The JB Hi-Fi share price surged 11.5% higher yesterday to an all-time high after the company released a strong half-year result. The company reported a 5.1% increase in sales for JB Hi-Fi Australia and a 0.8% increase in sales for JB Hi-Fi New Zealand.
Additionally, management increased FY20 total sales guidance to circa $7.33 billion, up from previous guidance of around $7.25 billion.
Bega Cheese Ltd (ASX: BGA)
Bega Cheese is a dairy company that produces approximately 236,000 tonnes of dairy products annually and owns brands Bega, Vegemite, and Zoosh. 10.89% of Bega shares are currently held short.
The bushfires impacted Bega’s production with some 900,000 litres of milk unable to be collected due to road access restrictions. Two suppliers opted to dry off herds earlier than planned due to the fires which reduced milk supply by up to a further 1 million litres.
The bushfires affected farm operations and infrastructure, destroying fencing and power lines, burning out paddocks, and restricting road access. Bega assisted farmers by providing generators, feed, fencing, and other assistance to repair farms and keep milk flowing.
Bega expects some of the costs of this assistance will be covered by business interruption insurance.
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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 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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