Seven of the Australian sharemarket’s most-shorted stocks have inflicted an estimated $1 billion in potential losses on hedge funds, defying aggressive bearish bets. This comes as aggregate short positions against Australian companies have surged by 60 per cent since the start of the year, reaching $61 billion, according to ShortMan data sourced from ASIC. A combination of robust earnings, strategic management changes, and elevated commodity prices has propelled share prices higher, catching many short sellers off guard.
Biotech firm Telix, which develops diagnostic and therapeutic products for cancer, sits atop the list of short-seller pain. Despite attracting nearly $524 million in short positions, its stock has rallied 32 per cent this year, leading to $100 million in potential losses. Similarly, lithium giant Pilbara Minerals (PLS), a major producer of critical battery materials, saw its shares jump 31 per cent, costing hedge funds over $500 million. Short sellers had initially bet on a multi-year glut in the lithium market, a forecast that dramatically reversed as demand for grid-scale energy storage surged. Mineral Resources, a diversified mining company with interests in iron ore and lithium, also became a painful bet for short sellers. Its stock soared 23 per cent as the company improved its production profile and used stronger cash flows to tackle high debt, resulting in a $200 million swing.
Patent and trademark firm IPH, with significant offshore earnings, saw its shares rise 17 per cent, costing short sellers $15 million, as a currency-play strategy backfired with the Australian dollar’s strong performance. Rare earth producer Iluka, drawing $185 million in short positions, has seen its shares rocket 37 per cent, causing $68 million in losses, though its surge is noted to be ahead of current earnings. Data centre developer NextDC, the nation’s largest listed operator and builder of a facility for OpenAI, also hit short sellers with $100 million in losses as its stock climbed 18 per cent, with fears over massive capital requirements easing. Even small appliance maker Breville, a company known for its kitchen appliances, caused $18 million in losses despite only a 5 per cent advance, as its strong global coffee machine sales countered concerns over trade tensions.
