ASX short selling reports: how to read ASIC short positions

Short sellers bet that a share price will fall. In Australia, the total amount of each company that has been sold short is published every day, which gives ordinary investors a window into what some professional investors think. Here's how to read that data and what it can and can't tell you.

What short selling is

A short seller borrows shares, sells them, and hopes to buy them back later at a lower price before returning them to the lender. If the price falls, they profit; if it rises, they lose, and in theory their loss is unlimited.

Short selling is legal and regulated in both Australia and New Zealand. It's used by hedge funds betting against overvalued companies, and also for hedging: a fund might short one company to offset the risk of owning a similar one.

ASIC's short position reports

In Australia, large short positions must be reported to ASIC (the Australian Securities and Investments Commission). ASIC then publishes aggregated figures for each company:

• Reports are published daily, with a lag of about three trading days after the position date.
• They show the total reported short position for each company and that position as a percentage of shares on issue.
• They're aggregated, so they don't reveal who is short.
• Only positions above reporting thresholds are included, so the true total can be a little higher.

The data is free to download from the ASIC website. Tasman Desk pulls it in automatically and highlights the most-shorted ASX companies and the fastest-rising short positions.

How to read short interest

Level

Most large ASX companies have short interest below 1 or 2% of their shares. Levels above about 5% are relatively high, and the most shorted companies on the ASX can sit above 10%.

High short interest tells you a meaningful group of professional investors expect the price to fall, or are hedging something. Common reasons include:

• Doubts about valuation after a big run-up
• Expected earnings downgrades or competitive threats
• Concerns about debt or accounting
• Structural decline in an industry
• Hedging of convertible notes or related positions (not a direct bearish view)

Change

A rising short position is often more informative than a high one. A jump from 2% to 6% over a month suggests new negative views are building. A falling short position can mean short sellers are closing their bets, sometimes after bad news has already played out.

Days to cover

Comparing the short position with average daily trading volume gives "days to cover": how many days of normal trading it would take short sellers to buy back their shares. High days-to-cover can mean a crowded short.

Short squeezes

If a heavily shorted company announces good news, short sellers may rush to buy shares to limit losses. That buying can push the price up sharply, a short squeeze. It's one reason high short interest isn't simply a sell signal.

Limits of the data

• It's delayed by about three trading days.
• It doesn't show why a position exists. Hedging and arbitrage can look the same as a bearish bet.
• Short sellers are often wrong, or right but early.
• It covers ASX-listed securities only. New Zealand has no equivalent daily public report of aggregated short positions for NZX companies.

Use short interest as one input alongside company announcements, results and valuation, not on its own.

What about NZX companies?

For dual-listed New Zealand companies, ASIC's report covers short positions on the ASX line only, which can be a small part of total trading. Treat it as a partial picture. See dual-listed NZX and ASX companies.

Related signals worth following

• Substantial holder notices: large investors crossing 5% or changing their stake. See substantial holder notices and director trades.
• Director trades: insiders buying their own company's shares can be a meaningful counterpoint to high short interest.
• Guidance changes in company announcements.

Frequently asked questions

Where can I see the most shorted ASX stocks?

ASIC publishes daily short position reports on its website showing the reported short position in each ASX-listed company. Tasman Desk summarises the most-shorted companies and the biggest increases.

How often are ASX short positions published?

Daily, with a lag of about three trading days after the position date.

What percentage of short interest is high?

For most ASX companies short interest is below 2% of shares on issue. Above about 5% is relatively high, and the most-shorted companies can exceed 10%.

Is high short interest a reason to sell?

Not on its own. It shows some investors expect a fall or are hedging, but short sellers can be wrong, and good news can trigger a short squeeze. Use it alongside other research.

Is there a short selling report for the NZX?

New Zealand doesn't publish an equivalent daily report of aggregated short positions. ASIC's report covers only the ASX line of dual-listed companies.