...yes we know that lithium stocks have not been doing great of late due in part to shorting activity.
...but there are grounds to support the rationale to stay short, the instos know it and the instos are behind it.
...but before you go and condemn domestic retail shorters, there are 2 things you may not know:
1. The shorting is done globally across internationally traded lithium majors, so not confined to ASX
2. The main reason they are shorting lithium stocks is because they can't short lithium the commodity.
Now James below is saying that when lithium turns, we could get a short squeeze and all lithium stockholders, mostly stale bulls now, would rejoice.
Yes, BUT there's also two other aspects why the shorts would likely still be winning in the interim:
1. They must believe that the valuations of these lithium stocks are still too rich relative to their prevailing and short to medium term fundamentals, so even if lithium price recover modestly, it does not make their valuation any compelling
2. They must believe that their downside is limited, because it is more likely that EV growth would struggle for some time yet as evidenced by Tesla's poor delivery and that growth won't get any better due to global economic slowdown, geopolitical challenges, major US and EU makers pussyfooting and having cold feet about moving too quickly into full EV.
Rather than being paranoid over shorts, instead lithium stockholders ought to assess what the outlook is like for the industry going forwards. My own assessment is that, notwithstanding short term variability in price movements, lithium stocks are unlikely to make significant ground upwards before the US market faces a steep correction.
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I track the short interest in #lithium stocks. Data for end March is now available. The aggregate short interest in the 7 big names I track is now in aggregate just over US$5.1bn. A new ATH for this cycle. $ values increased in part due to higher share prices, but the SI across the sector as % of share count still increased between mid and March in most cases. The shorts have an equity bet now equivalent to ~60% of the revenue base for the entire global #lithium industry. Puts into perspective the negative sentiment rather than the financial risk that is being taken on. That's because they can't short the commodity. Most of the names I track don't have much if any balance sheet risk. The shorts are IMO taking on a pure bet on the commodity price. When the #lithium price sustainably turns, and its a when, not an if IMO, the short thesis goes. HFs move in packs. Watching them all trying to cover their shorts at the same time will be fun to watch & make the recent solar eclipse look like a daily occurrence. o $ALB SI now at ATM and 12.5% of the equity and up from 12% mid March. o $PLS SI up small from mid March to 20.6% of the equity. o $SGML up in the period to 17.6% of the ex A10 free float (16.9%) o $SQM remains small as % of share count, but large in $ terms. o $ALTM up to 6.7% vs 5.6% mid March o Other AUS names: $MIN 6.58% (6.05%) $LTR 10.1% (9.6%) $SYA 7.2% vs 7.0% (some of you asked for $SYA) DYOR
