If you thought short sellers are beating a hasty retreat following the GameStop Corp. (NYSE: GME) share price saga, think again!
Australian short sellers are not only holding on to their bearish bets, but they have stepped up their attack on a number of ASX shares.
Unlike their US counterparts, short selling hedge funds are retreating with their tails between their legs after the Reddit army of retail investors sent the GameStop share price soaring.
Short sellers undeterred by GameStop squeeze
Short sellers are those who borrow stock to sell on-market. The aim is to buy it back later at a lower price to profit from the difference.
These bearish investors tend to be more sophisticated than mum and dad investors. But as the GME share price experience showed, David can beat Goliath at his own game.
But Aussie hedge funds aren’t worried. The total volume of ASX shares being shorted has actually risen by nearly 1% to 4.39 billion since the start of 2021.
That’s according to the latest ASIC data, which is always a week behind.
Volume of shorted ASX shares holding firm
The fact that the S&P/ASX 200 Index (Index:^AXJO) is closing in on its record high may also be spurring on short sellers.
The volume of shorted ASX shares only dipped 0.18% when the GameStop made headlines around the world.
Not only have short sellers here given a collective yawn to the Reddit drama, they have increased their bearish bets against a number of ASX shares in January.
The ASX shares with the biggest increase in shorts
The stock that saw the biggest increase in short interest is the Northern Star Resources Ltd (ASX: NST) share price.
The number of shorts against the gold miner jumped a whopping 425 percentage points to 7.5% from the start of January till 29 January.
The rise in shorts against the NST share price could be due to a bearish view on Northern Star’s acquisition of Saracen Mineral Holdings Limited (ASX: SAR). It could also be due to the falling gold price.
Golden short target
After all, Northern Star isn’t the only gold miner to see an increase in shorts. The Resolute Mining Limited (ASX: RSG) share price was also hit by short sellers.
Short interest in the Resolute Mining share price lifted 189 percentage points to 7% over the same period – making it the third biggest increase on the ASX.
Betting against the Tyro share price
In second place is the Tyro Payments Ltd (ASX: TYR) share price. The volume of shorts in the emerging payment solution provider jumped 330 percentage points to 4.6% last month.
The embarrassing outage on its platform is attracting short sellers who are convinced the stock could fall further as customers lose confidence in its solution.
This could severely impact on its short- to medium-term growth potential as it takes a long time to repair trust.