Short-sellers are stepping up their attack against these popular ASX shares

Short-sellers have pared their bearish bets as the S&P/ASX 200 Index (Index:^AXJO) recovered from its COVID-19 meltdown. But these traders have stepped up their attack against a number of popular stocks this month!

The number of shares that are shorted dropped by 4.4% since the market bounced from its bear market low on 23 March.

Short-sellers are those who borrow stock to sell on-market with the aim of buying it back at a lower price later to profit from the difference.

It’s useful to keep an eye on what this group does. While they don’t always get their trades right, they tend to be more sophisticated than the average investor.

ASX stock with largest increase in shorts

One stock that caught their eye is the Southern Cross Media Group Ltd (ASX: SXL) share price after its big surge in May.

The regional broadcaster experienced the largest increase in shorts of any ASX stock this month, according to the latest ASIC data which is always a week behind.

The number of shares in the regional broadcaster that have been short-sold increased a whopping 362 basis points to 7.2% since the start of this month to 15 June.

It seems Southern Cross isn’t a recent favourite. Short-interest in the company jumped 543 basis points (or 5.43 percentage points) since 23 March.

Losing appetite

In second place is Freedom Foods Group Ltd (ASX: FNP). Shares in the nutritional food and drink supplier saw the second biggest increase in shorts this month.

Short interest in the company jumped 185 basis points to 4.8%, and that’s probably something to do with its dismal trading update as it was hit by the coronavirus shutdown.

Management said it was seeing green shoots of recovery but short-sellers don’t seem to share that view.

Looking tarnished

In third spot is the Lovisa Holdings Ltd (ASX: LOV) share price with short-interest in the jewellery chain increasing 164 basis points to 6.3% in the first two weeks of June.

The performance of the retailer stands in contrast to some of its peers who have benefited from the COVID-19 restrictions. These lucky retailers like Temple & Webster Group Ltd (ASX: TPW) and Premier Investments Limited (ASX: PMV), which have seen online sales spike.

But as I reported last week, Lovisa isn’t as well placed due to its weak online presence and expected weak demand as weddings and other social events are unlikely to return to normal anytime soon.

Other notable stocks that have seen big increases in short-interest include fund manager Perpetual Limited (ASX: PPT), consumer finance company FlexiGroup Limited (ASX: FXL) and travel agent Flight Centre Travel Group Ltd (ASX: FLT).

More reading

• ASX 200 up again, ASX retailers make big gains
• These 3 ASX ETFs are yet to recover from the market crash
• Investing experts warn of second ASX market crash
• What’s next for these 4 ASX travel shares?
• Temple & Webster shares continue to grow despite coronavirus restrictions

Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended FlexiGroup Limited, Flight Centre Travel Group Limited, Freedom Foods Group Limited, and Temple & Webster Group 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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