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https://thewest.com.au/business/min...ng-interest-climbs-to-a-new-zenith-c-14499180

Pilbara Minerals can’t shake off the lithium detractors as shorting interest climbs to a new zenith

Adrian RausoThe West Australian
Wed, 1 May 2024 2:10PM



Pilbara Minerals' Pilgangoora plant Credit: csfoto/Photo credit & copyright ©: 'Cs

Despite green shoots seemingly resurfacing in the lithium sector Pilbara Minerals’ legion of retail shareholders remain firmly in the crosshairs of short sellers.

The percentage of Pilbara’s stock held by short sellers surpassed 22 per cent for the first time since December to now be perched at a record 22.11 per cent, according to the latest data from the Australian Securities and Investments Commission.
This means that approximately $2.7 billion worth of Pilbara shares are in the hands of shorters. The West Australian understands global investment banking behemoth Goldman Sachs — which has a bearish view of lithium’s future — are one of the key short sellers.

Short selling is a practice where traders, usually large institutions, aim to profit from a decrease in the price of a stock.
Pilbara is the one of most traded stocks on the Commsec share trading platform — the most popular platform with Australian retail shareholders — with the balance of Pilbara trades slightly tipped towards purchases over sales.

A year ago Pilbara’s short selling interest was hovering around 5 per cent but the collapse of lithium prices fuelled the detractors, who have made the miner the most shorted stock on the ASX by a considerable margin.

Pilbara shares have remained stable over the past 12 months and have increased by just over 2 per cent for the year to date.
The company bled $362 million in cash during the first three months of 2024 but still retained a huge bank balance of $1.8 billion and told investors last month the lithium pricing environment was improving.

The average realised price for Pilbara’s spodumene concentrate from its flagship Pilgangoora project languished at $US804 per dry metric tonne for the March quarter, but at the tail end of the period it sold a batch of the product for US$1,106/dmt.

However, influential broker JP Morgan downgraded its rating of Pilbara to a sell last month, stating the company is overvalued and should be trading at $3.10 a pop. Its shares are currently changing hands for $4.07.


Pilbara chief executive Dale Henderson has previously said the company is a prime target for shorters due to its large market capitalisation, liquidity in the trading of its shares, and pure-play exposure to lithium.
“What we’ve rationalised is that people are actually betting against the lithium price because there’s very, very few financial instruments to do that through,” he has said.
“But you have to be very brave to bet against Pilbara . . . what we’ve seen is when the lithium market turns, it turns quickly.”

Pilbara has not responded to The West’s request for comment.