Santos Ltd (ASX: STO) shares could be one to watch on Tuesday after the company dropped a new update after yesterday’s market close.

The Santos share price finished the session at $8.35, up 1.7%, and has now climbed around 35% since the start of 2026.

With the stock already trading close to its 52-week high, investors will be watching closely to see how the market reacts to the company’s latest move in Papua New Guinea.

Here’s what we know.

Santos is increasing its exposure

Santos has agreed to spend around US$189 million, or roughly $262 million, to buy another 3.3% of the Papua LNG project from TotalEnergies.

Once the Papua New Guinea Government’s planned back-in is taken into account, Santos expects its stake to increase from 17.7% to 21%.

The deal is still subject to regulatory approvals and the project reaching a final investment decision, which is currently targeted for the fourth quarter of 2026.

If everything goes ahead, Santos expects its share of LNG production from Papua LNG to rise by around 19% to about 1.2 million tonnes a year.

There’s also a change at the top of the project, with ExxonMobil set to take over as operator from TotalEnergies and increase its own interest to 34.1%.

Santos believes having ExxonMobil operate both Papua LNG and the existing PNG LNG project could improve efficiency and help with execution.

CEO Kevin Gallagher said the deal gives Santos a larger position in a project the company sees as part of its next stage of growth, alongside Barossa and Pikka.

Gas policy is back in focus

The Papua LNG deal is not the only thing Santos investors have to watch this week.

The Australian reported today that Australia Pacific LNG wants exporters blocked from buying domestic gas to meet export commitments under the Federal Government’s proposed reservation scheme.

APLNG chief executive Dan Clark also warned that the proposed 20% reservation target could discourage investment in new supply.

Santos has raised similar concerns, arguing that pushing too much gas into the domestic market could lower prices in the short term but make future projects less attractive.

But the debate could get more attention tomorrow, when Santos CEO Kevin Gallagher speaks at the National Press Club.

Is there much upside left?

After a 35% rise this year, Santos shares are already trading close to their 52-week high.

TipRanks shows an average 12-month price target of $8.44, only slightly above Monday’s close. Six of the eight analysts shown still rate the stock as a buy, with the other two on hold.

That still leaves brokers broadly positive on Santos, although the average target is only a touch above the current share price.

The post Santos shares on watch after major Papua LNG deal 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 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.

If I were a retiree, there would be only a few ASX shares I’d be willing to rely heavily on for returns, including dividends. One of the top stocks I’d consider for the long-term is L1 Long Short Fund Ltd (ASX: LSF).

This business is one of the larger listed investment companies (LICs) available to Australians. The job of a LIC is to invest in shares and other assets on behalf of shareholders. It’s operated by the fund managers and analysts at L1 Group Ltd (ASX: L1G).

When I think about what retirees may be searching for, or may benefit from, I think the ASX share can tick all of the boxes.

Compelling passive dividend income

The feature retirees may be after most is passive income. Dividends from ASX shares are a great option, in my view.

For me, it’s not just a question of how large the dividend yield is. I’d also want to see dividend reliability and payout growth as well.

L1 Long Short Fund has certainly ticked the box for income. It has increased its annual dividend per share every year since 2021, when it first started paying a dividend. The LIC changed to quarterly dividends in 2025, and it has grown its quarterly dividend every quarter since then.

The business has a stated goal of increasing its dividend for shareholders, which it’s clearly doing.

If the business continues to increase its dividend payout each quarter over the next 12 months, it would have a FY27 grossed-up dividend yield of 4.7%, including franking credits, at the time of writing. I think that would be a great starting dividend yield for retiree investors.

Pleasing diversification

Another aspect that retiree investors may really benefit from is the diversification that the LIC can provide.

It invests in both ASX shares and international shares, using long-term investing and short-selling strategies. Short selling is when you can generate profit if a share price goes down, so it’s a good way to protect against falling markets.

Given its investments across Australia, New Zealand, North America, Europe and Asia, it can provide diversification for retiree portfolios that may be too focused on Australian assets (including property).

The LIC also tends to avoid investing in the tech sector or ASX bank shares, so it can generate returns in ways that differ from those of typical exchange-traded funds (ETFs) that focus on US or ASX shares. Its three most fruitful sector hunting grounds have been materials, industrials and communication services.

Strong portfolio returns is delivering capital growth

The portfolio strategy has been very effective, generating strong net returns. In the past five years, the LIC’s net return has been an average of 16.1% per year. Only some of this was used to pay dividends, with the rest of the investment returns retained within the business.

The increasing portfolio value has driven a rise in the share price. Over the past five years, the L1 Long Short Fund share price has risen 78% (at the time of writing).

Of course, past performance is not a guarantee of future returns, but I’m optimistic it can continue to deliver pleasing long-term returns.

The post Why this top ASX share is a retiree’s dream for FY27 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in L1 Group and L1 Long Short Fund. 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.

The most shorted ASX shares tell investors which companies professional investors expect to suffer.

The latest short position reports from ASIC, covering the week to 1 September 2026, contain two names that have each had their respective issues.

One company is shorted because it is losing money.

The other is shorted because it made too much, too quickly.

The 10 most shorted ASX shares right now

DroneShield Ltd (ASX: DRO) sits at the top of the list with 15.37% of its register sold short.
Lotus Resources Ltd (ASX: LOT) follows at 15.04%, then 4DMedical Ltd (ASX: 4DX) at 12.37%.
Domino’s Pizza Enterprises Ltd (ASX: DMP) is at 11.98% and Treasury Wine Estates Ltd (ASX: TWE) at 11.74%.

The week-on-week movement is worth noting.

CAR Group Ltd (ASX: CAR) has dropped out of the top ten entirely, and Elders Ltd (ASX: ELD) has taken its place.

DroneShield’s short interest actually rose, from the 14.9% recorded a week earlier, despite the shares already having fallen sharply.

DroneShield: Shorted because it lost money

DroneShield has become the most shorted stock on the market for reasons that become clearer when investors look at the company’s annual accounts.

First-half revenue rose 74% to $125.8 million, which is a strong number.

Underneath it, gross margin fell from 65.3% to 60.0%, underlying EBITDA swung to a $12.4 million loss, and the statutory result was a $32.2 million loss, compared with a $2.1 million profit a year earlier.

The company also has an ASIC investigation running into share trading and disclosures from November 2025.

The counter-argument is that the balance sheet is untouched.

DroneShield holds $180 million of cash with no debt and has reaffirmed FY 2026 revenue guidance of $250 million to $270 million.

The shares are down about 74% from their high, which is a lot of scepticism already in the price.

PLS Group: Shorted because it made too much

PLS Group Ltd (ASX: PLS) is the opposite case entirely.

FY26 revenue rose 152% to $1.93 billion, underlying EBITDA reached $1.14 billion at a 59% margin, and the company swung from a $196 million loss to a $526 million profit.

The company resumed dividends with a fully-franked 5 cents per share.

Shares rocketed 30% in August alone and have roughly doubled over twelve months.

So why short it?

Because the result rests on a realised spodumene price of US$1,488 per tonne, more than double the prior year.

FY27 capital expenditure is guided at $620 million to $685 million, roughly double the prior year, which competes directly with the dividend just restored.

Lithium has always been a violently cyclical business, and bears are betting the cycle turns before the capital is spent.

Managing director Dale Henderson said of the results:

That financial strength gives us flexibility: we can continue investing in Pilgangoora, bring Ngungaju back into production, advance P2000 and Colina, and pay a fully franked final dividend of 5 cents per share.

Foolish takeaway

Short interest is a reading list, not a verdict.

Plenty of heavily shorted companies go on to perform perfectly well, and a crowded short position can unwind violently.

What I take from this particular table is that the most shorted ASX shares are not all the same bet.

For DroneShield, the question is profitability, and for PLS Group, it is the lithium price.

The post What are the most shorted ASX shares on the market right now? appeared first on The Motley Fool Australia.

More reading

• Top 3 ASX defence shares to buy right now
• Here are the top 10 ASX 200 shares today
• 3 reasons to buy DroneShield shares after their 74% decline
• These are the 10 most shorted ASX shares
• 9 ASX shares downgraded by experts post-results this week

Motley Fool contributor Mark Verhoeven 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 Domino’s Pizza Enterprises, DroneShield, and Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates. The Motley Fool Australia has recommended CAR Group Ltd, Domino’s Pizza Enterprises, and Elders. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.