Category: Stock Market

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

As the first part of 2022 so brutally reminded us, stocks can go down as well as up.  If you’re not prepared for that reality, then a market crash can feel incredibly terrifying to live through. After all, it feels like you’re watching your life savings slip away, often at the same time that your job seems to be at risk due to cost cutting driven by lack of investors’ or leadership’s confidence in the future.

In a world where that’s the ugly reality you’re facing, sleeping easy through a market crash might seem like an impossible dream. Believe it or not, it is possible to set yourself up to make it through a really rough market and wind up better on the other side. It takes pre-planning, discipline, and accepting the trade-offs that come with proper risk-management in your investments. With that in mind, here are four ways to sleep easy in a market crash.

No. 1: Have an emergency fund

One of the biggest challenges you’ll face is the fact that your costs don’t go away just because the stock market is down. Being forced to sell your stocks while they’re down to cover a bill is a great way to turn a temporary market dip into a permanent loss of capital. Recognizing that risk only after it’s staring you in the face adds a substantial amount of tension to what is already a bad time.

With an emergency fund that has three to six months of expenses in it, you have a buffer that can help you navigate through short-term challenges without immediately having to tap your long term money. That’s a huge benefit when it comes to sleeping at night.

Of course, in today’s inflationary environment, it may not be a great idea to have too much tied up in cash, since that cash is so rapidly losing purchasing power. That’s why it’s also important to balance your short-term cash needs with your longer-term financial plan to more completely manage the risks you face.

No. 2: Keep money you know you’ll need soon out of stocks

If you expect you’ll need money from your portfolio in the next five or so years, that money does not belong in stocks. Instead, it belongs in something like duration-matched Treasury or investment-grade bonds where you’ll have a higher likelihood of having the cash you’ll need when you need it. You won’t earn high returns on this money, but if the stock market happens to be crashing when those expected bills come due, you’ll be incredibly glad you had it in higher-certainty assets.

Knowing that you can still reach your important, nearer term life priorities even as the market is crashing around you is a critically important tool that can help you sleep at night. Like with an emergency fund, the lower returns you can expect to earn on this money mean you shouldn’t over save in this bucket, especially in a high-inflation environment. Finding the right balance can also be important in your ability to sleep easy during a market crash.

No. 3: Avoid portfolio margin

The margin that your broker likely offers you is a knife that cuts both ways. When the market is rising rapidly, it can magnify your returns and make you feel like an investing genius. Once the market turns sour, though, your losses will be magnified as well. As if that weren’t enough, most margin loans come with substantial interest attached. That interest gets charged based on the amount you borrowed, not based on the amount your portfolio is worth.

On top of all that, when you’re using margin and the market moves far enough against you, your broker can issue a margin call. When that happens, you must either come up with cash, liquidate holdings, or find another way reduce the risk profile in your account. If you don’t, then your broker will liquidate your positions for you until that call is satisfied.

Put it all together, and having margin takes the pain of a market crash and makes it substantially worse. Avoiding that margin goes a long way toward helping you sleep easy when the market is crashing.

No. 4: Recognize the value of what you own

Ultimately, a share of stock is nothing more than a small ownership stake in a company. That company has a value based on its ability to earn money over time. By estimating how much the company will earn over time, then adjusting for your stake in it, you can get a reasonable ballpark estimate of that value.

A technique like the discounted cash flow model can be useful on that front, as it can let you quickly change your estimates and come up with a range of values based on the scenarios you lay out. Because you’re dealing with the future, you’ll never get it perfect, but you can usually get close enough to make reasonable investing decisions.

With a tool like that on your side, you’ll start to see cases where a market crash is really an opportunity to buy great companies for less than they are really worth. Especially if you’ve done a great job with the other three ways to sleep easy in a market crash, this one can really help you sleep easy. After all, this is the one that can transform you from a panic seller into an opportunistic buyer, which can be a great way to see your net worth improve in any subsequent recovery that may follow the crash.

Get started now

It’s never easy to live through a market crash. Still, with some decent planning and a willingness to accept the trade-offs involved, you can get yourself to where you’re sleeping far easier even as the market is crashing around you.

It is far better to have your plans in place before the market crashes, but if the market’s recent decline is what it takes to get you to put a better plan in place, then so be it. At some point, the market will crash again. The plans you start putting in place today should serve as a great foundation for getting you ready to sleep that much easier whenever the next crash may come our way. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 4 ways to sleep easy in a market crash appeared first on The Motley Fool Australia.

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Chuck Saletta has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Liontown Resources Limited (ASX: LTR) share price is dropping on Monday morning.

At the time of writing, the lithium developer’s shares are down 3% to $1.23.

Why is the Liontown share price dropping?

The Liontown share price is on the slide on Monday morning after broad market weakness offset the release of a positive announcement.

According to the release, Liontown has completed negotiations with electric vehicle giant Tesla and executed a definitive full-form offtake agreement.

The agreement is for the supply of spodumene concentrate from the company’s flagship 100%-owned Kathleen Valley Lithium Project in Western Australia.

Liontown will supply up to 150,000 dry metric tonnes (dmt) per annum of spodumene concentrate, which represents approximately one-third of the project’s start-up production capacity of ~500,000 tonnes per annum.

The release explains that supply is expected to commence in 2024 and the offtake agreement is conditional upon Liontown commencing commercial production at Kathleen Valley no later than 1 December 2025.

This deal complements the company’s existing agreement with LG Energy Solution. That agreement is for the supply 100,000 dry metric tonnes in the first year, increasing to 150,000 tonnes per year in subsequent years.

Pleasingly, another deal may not be far off. Liontown revealed that it has received very strong interest from a range of parties for the remaining third offtake.

Once this is complete, it will result in approximately 85% of the production from Kathleen Valley being contracted. The remaining production will be sold on spot or to existing customers.

‘A tremendous achievement’

Liontown’s Managing Director and CEO, Tony Ottaviano, was pleased with the deal. He said:

We are pleased to have concluded negotiations with Tesla allowing us to execute our second full form Spodumene Concentrate Offtake Agreement. Tesla is a global leader and innovator in electric vehicles and having formalised arrangements for it to become a significant customer is a tremendous achievement.

This means that we now have two of the premier companies in the global lithium-ion battery and EV space signed up as foundational customers, marking a significant step towards realising our ambition to become a globally significant provider of battery materials for the clean energy market.

The post Liontown share price drops despite Tesla deal appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Allkem Ltd (ASX: AKE) share price is falling on Monday.

In early trade, the lithium miner’s shares are down 2% to $11.60.

Why is the Allkem share price falling?

Investors have been selling down the Allkem share price on Monday following the release of announcement out of the company relating to pricing and its guidance.

According to the release, continued strong market conditions have positively impacted the price received for lithium carbonate from the Olaroz Lithium Facility during the current quarter.

As a result, The June quarter FY 2022 average price received for lithium carbonate is expected to be approximately 14% above its prior guidance at US$40,000 per tonne FOB on sales of approximately 3,500 tonnes.

Allkem highlights that its customers continue to value security of supply which is reflected in a fully committed order book for the remainder of the calendar year.

Spodumene production disappoints

Things haven’t been quite as positive for its lithium spodumene concentrate operations.

Realised spodumene concentrate pricing in the June quarter has been approximately US$5,000 per tonne SC6% CIF. This is in line with prior guidance and based on anticipated quarterly shipments of approximately 38,000 dry metric tonnes at an average grade of 5.3%.

However, this will only bring its full year spodumene production to 192,000 to 196,000 dry metric tonnes, which will be 2% to 4% short of guidance.

Management advised that this has been driven by production delays resulting from the highly competitive Western Australian resources labour market and COVID-19 related requirements. Strategies have been implemented to mitigate these temporary impacts on production.

No details have been provided about how this may have impacted its costs.

Argentina reference price

Finally, concerns over news that Argentina has set a reference price for lithium put pressure on the Allkem share price this month.

However, Allkem isn’t concerned by the development. It explained:

Argentina’s Customs Agency has recently set a reference price for lithium carbonate of US$53,000/t. This reference price is used by regulatory authorities when reviewing export sales of lithium chemicals to prevent under-invoicing and improve pricing transparency. This price is not used for calculation of taxes, royalties or duties and Allkem does not expect it will have any material impact on product exports, realised prices or profitability.

The post Allkem share price falls on mixed lithium update appeared first on The Motley Fool Australia.

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• Is the Allkem share price selloff a buying opportunity?

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Qantas Airways Limited (ASX: QAN) share price has been having a good run in 2022 so far, but one top broker has flagged a potential weight on the airline’s recovery.

Citi equity analyst Samuel Seow reportedly believes a lack of pricing power in Qantas’ domestic operations could drag on the company’s bottom line.

At the time of writing, the Qantas share price is $5.49. That’s 6.6% higher than it was at the start of 2022.

For context, the S&P/ASX 200 Index (ASX: XJO) has slipped 4.6% this year, leaving Qantas’ stock outperforming by more than 11%.

Let’s take a closer look at what Citi predicts for the airline’s future.

Could this weigh on Qantas shares this year?

Australia’s tourism sector is bouncing back in 2022. In fact, many ASX 200 travel shares – including Qantas – are expecting to return to profitability in the near future.

The ‘flying kangaroo’ recently told the market it’s hoping to break even in financial year 2023.

Right now, its recovery is being led by demand for domestic travel. However, Seow is sceptical of the airline’s pricing power in the domestic segment, as reported by The Australian.

While international competition looks limited, it appears the reverse is the case in domestic, which is a larger contributor to profit.

With relatively soft domestic passenger data and an element of over servicing, we expect pricing power to be constrained domestically despite rising fuel.

Citi’s Samuel Seow, as quoted by The Australian.

The broker is also reportedly concerned that Qantas’ recovery might be slower in its more profitable routes – those between Sydney, Melbourne, and Brisbane.

Flights between the nation’s three largest cities are known as ‘the golden triangle’ of Australian aviation.

Perhaps unsurprisingly, other airlines – including Regional Express Holdings Ltd (ASX: REX) – have been jostling for a share of the lucrative market.

“Competition is picking up more market share on the golden triangle,” Seow said, as quoted by The Australian. “[That implies] some if not the majority of [Qantas’] capacity gains have been on less profitable routes.”

Citi reportedly has a $5.47 price target and a neutral rating on Qantas shares.

The post Could a lack of pricing power drag on Qantas shares in 2022? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Crypto prices displayed plenty of their notorious volatility last month.

With more downs than ups, the combined global crypto market fell 28% in May.

Bitcoin (CRYPTO: BTC) declined 17% in May. At the current price, the world’s first crypto is down 56% from its 10 November record highs.

Ethereum (CRYPTO: ETH) lost even more ground, down 27% over the month, while meme token Dogecoin (CRYPTO: DOGE) dropped 37% in May.

Of course, that’s all-virtual water under the bridge now.

So, what might crypto investors expect in the month ahead?

For some insight into that answer, we reached out to two industry pros.

Crypto prices and US equity markets

Noting that crypto prices have fallen amid rising interest rates, especially from the influential US Federal Reserve, Simon Peters, market analyst at eToro, told The Motley Fool, “I think markets have priced in interest rate increases over this year now.”

Looking ahead to crypto prices in June and the rest of 2022, Peters said investor “focus is shifting to earnings and the possibility of a recession”.

According to Peters:

If these risks increase, we could see equity markets fall further. Given the high correlation between US equity markets and crypto, crypto prices could fall further also. Historically, crypto bear markets have seen declines from the all-time high of 80% or more. The fact that we are only down 56% from the all-time high on Bitcoin could suggest there is room for a further fall.

But there is a bullish case for crypto prices as well.

“With the recent sell-off in Bitcoin, we are now testing some interesting technical indicators,” Peters said.

He pointed out that the 200 weekly exponential moving average is historically where Bitcoin bear markets have tended to bottom out. “Also, with on-chain metrics, Bitcoin prices are trading down towards the Realized Price, which again is historically a significant support level,” he added.

And there’s the potential, Peters said, that if recession risks increase we could “see a decoupling from US equities, as investors look for Bitcoin and other cryptos as digital safe-havens”.

Positive adoption signals

Jonathon Miller, Kraken Managing Director for Australia, told us that there still looks to be plenty of appetite for cryptos on both the institutional and private levels, which could help support crypto prices in the month and year ahead.

According to Miller:

Recent macro events mean financial markets are undergoing a period of acute volatility. Despite this, we are still seeing positive adoption signals from institutions and individuals for crypto.

We’ve had the launch of crypto ETFs in Australia, global brands like Spotify and eBay enter the NFT space even as the market cools down, and the likes of Emirates set to accept crypto payments from customers.

And there are still plenty of advancements taking place in the crypto world.

“While price movements matter, it’s important to focus on the innovation happening in the space during these times and it’s quite clear there is still plenty happening and lots more to come,” Miller said.

The post What’s the outlook for crypto prices in June? Industry insiders weigh in appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in and has recommended Bitcoin and Ethereum. 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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Unlike most other technology stocks, Brainchip Holdings Ltd (ASX: BRN) investors have enjoyed a nice share price rise over the past 12 months.

But their smile might become even wider this month as the stock is set to receive a tidy external boost.

After market close on Friday, S&P Dow Jones Indices announced that Brainchip would be added to the prestigious S&P/ASX 200 Index (ASX: XJO) on 20 June.

Brainchip’s promotion will take place as part of the index’s quarterly refresh, which sees three other companies added and five removed.

So why is this a big deal?

As well as the qualitative glory, membership to the ASX 200 can boost the share price.

This is because passive funds that follow the index will be forced to buy the stock.

The short-term rise in demand may lead to the price spiking, but the fund managers will still be obliged to buy Brainchip shares.

Pre-revenue hype for Brainchip

Brainchip is a pre-revenue developer of artificial intelligence computer chips. Its flagship technology is the Akida chip. 

Back in 2020, the shares ballooned after it became a local “meme stock”. After the excitement died down it settled in the 30 to 60 cents range for about a year.

But over the last six months, investors have again flocked to the stock after a series of favourable business deals to have it trading at $1.06 to start Monday.

During a time when tech shares have fallen out of favour, the Brainchip stock price has risen 127% since November.

That’s despite a 50% drop since mid-January.

The Motley Fool colleague Aaron Teboneras wrote last week that Brainchip’s current share price is “extremely attractive” if the business can “deliver on its potential”.

“The Akida chip is designed to think like a human brain and it can be used for a variety of purposes worldwide,” he said.

“These include in the manufacture of smart cars such as the Mercedes EQXX concept car as well as in home automation, unmanned aircraft, medical instruments, cybersecurity, and more.”

The post Brainchip shares could get a massive boost this month: here’s how appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Brainchip Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Commonwealth Bank of Australia (ASX: CBA) share price has been on the mend after a volatile month on the ASX.

Despite finishing 0.23% lower to $105.20 at Friday’s market close, shares in Australia’s largest bank have soared 12.5% since March.

What’s driving CBA shares higher?

Investors have been bidding up the CBA share price regardless of the current macroenvironmental headwinds in the global economy.

High inflation levels, along with concerns about a potential recession, have led to strong declines across international markets.

However, the banking giant has remained relatively resilient with a few brokers weighing in on CBA shares.

Morgan Stanley has a sell rating on Commonwealth Bank shares but if interest rates climb, this could be beneficial to the major bank.

As such, the broker cut its 12-month price target by 1.1% to $91.00 on CBA shares. This represents a decline of roughly 13% from where they trade today.

In addition, Goldman Sachs has a similar price point, lifting its 12-month outlook by 1.7% to $89.86 a share.

The company reported impressive half-year results in February, underpinned by favourable business outcomes.

It’s worth noting that the Commonwealth Bank is conducting a $2 billion off-market share buyback to reduce surplus capital and increase shareholder value. The capital management program is expected to reduce its CET1 ratio to 11.4% once completed.

Basically, this means that when CBA buys back its shares, the number of shares on its registry will decrease. With a lesser amount, this effectively increases the value of each share as the revenue and profits remain the same.

Traditionally, when this occurs, a company’s share price tends to rise over time.

CBA shares are just 4.5% off their all-time high of $110.19 reached in November 2021.

How much is CBA paying in dividends?

According to Goldman Sachs, CBA could pay a fully-franked final dividend of $2.00 per share for FY22.

Coupled with the interim dividend of $1.75, the full-year dividend would come to $3.75 per share. This reflects a 7.1% increase on FY21’s dividend. The targeted full-year payout ratio is between 70% to 80% on the bank’s cash earnings.

When factoring in the current CBA share price along with its full-year dividend, CBA’s dividend yield rises to 3.56%.

About the CBA share price

In 2022, the CBA share price is up around 4% after a bumpy ride at the start of the year.

On valuation grounds, CBA is the second largest company on the ASX with a market capitalisation of approximately $179.5 billion.

The post The CBA share price is now trading on a 3.5% fully-franked dividend yield appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The CSL Limited (ASX: CSL) share price has sensationally been dumped amid a broader market sell-off by investors.

Year to date, the global biotech’s shares have fallen by around 7.5%. By comparison, the S&P/ASX 200 Index (ASX: XJO) has lost 2.7% in the same timeframe.

Looking at Friday’s market close, CSL shares edged 0.14% higher to $269 apiece.

What’s weighing down CSL shares?

A couple of factors have negatively impacted the CSL share price, compelling investors to hit the sell button.

First and foremost, the S&P/ASX 200 Health Care Index (ASX: XHJ) has been in reverse throughout 2022, down 11%.

Investors appear to have focused their efforts on other performing sectors such as the S&P/ASX 300 Metals & Mining (ASX: XMM) index. This consists of the top 300 ASX companies involved in gold, steel and precious metals.

For context, the Metals & Mining sector has soared 5.78% from this time last Monday and is up 11% in 2022.

And it is no surprise, given the war in Ukraine and inflationary movements, that commodity prices have skyrocketed.

Market psychology can be a powerful force when crowd behaviour chases market rallies or sells off during downturns.

Another factor that has led CSL shares to fall is the delay in completing the acquisition of Vifor Pharma.

Originally, the deal was due to be wrapped up this month. However, receiving regulatory approvals is taking a little longer.

CSL now expects to finalise the takeover next few months.

What do the brokers think?

Before COVID-19, CSL shares were known for their high-growth and defensive qualities. The company’s share price had a healthy track record of outperforming the benchmark index, which attracted investors.

In February 2020, CSL shares hit an all-time high of $342.75 before losing more than 20% within a month.

Fast forward to today, a number of brokers have weighed in on the CSL share price.

Earlier this year, the team at Morgans cut its 12-month price target by 2.1% to $327.60 for CSL shares. Based on the current share price, this implies an upside of about 21.7% for investors.

Despite slashing its outlook by 1.5%, analysts at Citi had a more bullish price on the company’s shares at $335.00. From where CSL trades as of Friday, this represents an uplift of 24.5% over the next 12 months.

Even though both brokers reduced their price targets, they believe that the CSL share price is attractive at current levels.

A recap on the CSL share price

No doubt it has been a frustrating time for CSL shareholders. Traditionally, its shares outperform the broader market. However, this has not been the case since the start of the year.

On valuation grounds, CSL is the third largest company on the ASX with a market capitalisation of roughly $129.58 billion.

The post The CSL share price has at least 20% upside: top brokers appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The Rio Tinto Limited (ASX: RIO) share price has gone on a bit of a rollercoaster in 2022. Could the ASX mining share now be an opportunity?

Commodity business share prices can change quite rapidly according to price changes in their underlying resources.

Rio Tinto is involved with a number of different commodities though iron ore generates the lion’s share of net profit.

The ASX mining share has been rising in recent weeks. Since 10 May 2022, it’s up by more than 12%.

After the recent gains, we check whether the mining giant good value or not.

Broker ratings on the Rio Tinto share price

While it’s impossible to know what a share price will do in any given month, brokers have ratings on whether they think a miner is good value.

The broker UBS currently has a neutral rating on the miner, with a price target of $104. That implies a possible decline of around 10% over the next year. The broker doesn’t think the iron ore price will be as strong in the longer term so the mining giant’s growth could come from other commodities, such as copper and lithium.

According to UBS, BHP Group Ltd (ASX: BHP) would be a better choice.

Macquarie is more optimistic about Rio Tinto. It has a buy rating on the business with a price target of $135. That suggests a possible rise of 16% in the next year. The broker likes the copper opportunity for Rio Tinto with the Oyu Tolgoi project.

Ord Minnett rates Rio Tinto as a hold with a price target of $116. Part of the reason for the pessimism is the labour shortage facing the mining sector. Ord Minnett doesn’t think that Rio Tinto is going to stick to its guidance of shipments, with possible underperformance.

How big is the Rio Tinto dividend going to be?

Rio Tinto is known for paying big dividends, particularly when commodity prices are high. Resource businesses are renowned for their lower price/earnings (p/e) ratios, which have the effect of boosting their dividend yields.

UBS thinks that Rio Tinto is going to pay a grossed-up dividend yield of 13.2% in FY22 and 10.2% in FY23.

Macquarie is expecting even bigger dividends from Rio Tinto. At the current Rio Tinto share price, the broker thinks the FY22 grossed-up dividend yield could be 15.75% and 10.9% in FY23.

Ord Minnett thinks that Rio Tinto’s grossed-up dividend yield is going to be 14.8% in FY22 and 11.4% in FY23.

In the next two financial years, all of the brokers are expected double-digit yields from the ASX mining share.

Rio Tinto share price snapshot

Since the start of 2022, the Rio Tinto share price has gone up by 16%.

The post What are brokers predicting for the Rio Tinto share price in June? appeared first on The Motley Fool Australia.

More reading

• What happened to the Rio Tinto share price in May?
• Why are the ASX 200 iron ore giants outperforming on Friday?
• How might ‘green premiums’ impact the value of ASX mining shares?
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. 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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Once a week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) takes the crown as the most shorted ASX share for another week. This is despite its short interest reducing meaningfully week on week to 16.2%. Short sellers appear to believe the travel market recovery won’t be smooth sailing.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest edge higher to 13.6%. This betting technology company appears to have been targeted due to its lofty valuation and cash burn in an unforgiving investment environment.
• Nanosonics Ltd (ASX: NAN) has short interest of 12.3%, which is down slightly week on week. This short interest appears to relate to concerns over potential disruption and higher costs caused by this medical device company’s sales model transition in the United States.
• Polynovo Ltd (ASX: PNV) has seen its short interest ease to rise to 10.4%. This medical device company’s shares have just been dumped from the ASX 200 index.
• Webjet Limited (ASX: WEB) has short interest of 9.4%, which is down week on week. Short sellers continue to target this online travel agent despite management forecasting a big improvement in its performance in FY 2023.
• Appen Ltd (ASX: APX) has seen its short interest fall to 9.4%. It has been an eventful couple of weeks for this artificial intelligence data services company. Developments include a takeover collapse, a very poor trading update, and news that it has been booted out of the ASX 200 index.
• AMA Group Ltd (ASX: AMA) has 8.8% of its shares held short, which is down slightly week on week. There are concerns that this crash repair company’s balance sheet is in a precarious position and could require a recapitalisation.
• Block Inc (ASX: SQ2) has entered the top ten with short interest of 8.7%. This is largely in line with the short interest levels of its US listed shares.
• Kogan.com Ltd (ASX: KGN) has seen its short interest reduce to 8.7%. This ecommerce company has been targeted due to its poor inventory management, weakening margins, and rising competition from Amazon and others.
• Regis Resources Limited (ASX: RRL) has short interest of 8.6%, which is down week on week. Concerns over labour shortages, cost pressures, and lower grades have been weighing on its shares.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

More reading

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• Could the current Webjet share price offer a 25% upside?
• 3 ASX 200 shares swimming in billions, besides banks and miners
• Why are ASX 200 tech shares having such a cracking Friday?
• Silver lining for Appen shares following takeover turmoil

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd, Betmakers Technology Group Ltd, Block, Inc., Kogan.com ltd, Nanosonics Limited, and POLYNOVO FPO. The Motley Fool Australia has positions in and has recommended Block, Inc., Kogan.com ltd, and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, Flight Centre Travel Group Limited, and Webjet Ltd. 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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