Hi All,
Here,
(below) may be of interest -
'Why is Galaxy’s stock so heavily shorted and what is the Company doing about this?Short selling is a legal form of trading that is largely out of Galaxy’s control.
Many of these traders have taken a view on the lithium industry broadly and are shorting Galaxy and its peers.
Lithium stocks are some of the most shorted stocks on the ASX and there are two other lithium companies in the top 10 most shorted list.
The fact that Galaxy is an institutional grade company means that there is the ability for shorters to borrow stock which is not available in the non-institutional grade companies.
We have made contact with an investment bank who represents a large portion of this activity.
They confirmed that the short position is largely driven by the lithium/EV thematic.
Additionally, they confirmed that Galaxy’s short position compared to its peers doesn’t necessarily reflect their clients’ preferences but more the borrowing availability of the shares and utilisation.
The underlying activity is representative of their clients’ views which is largely driven by machine-based decisions or what other funds are doing i.e. these funds move in the same direction.
The best way for Galaxy to combat the short position is to execute its growth strategy released in late 2019 and position the company for the inevitable market recovery in the lithium sector.
Additionally, Chinese walls exist between the buy side and sell side of any investment bank.
This means that within the same bank, there are strict measures in place to ensure analysts operate independently from the broking side.
This explains why you may observe a positive buy recommendation from analysts, whilst the same bank participates in short selling.
This is a common occurrence and not unique to Galaxy.'
Reference -Galaxy Resources. (unknown)
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