Shorts and my rationality as you requested
1. Seems that all stocks that entered the ASX 200/300 with us has /had similar a level of shorts applied instantly (Almost by default it seems). So blanket open short position on new entrants. Seems to be the arbitrary application of a blunt and unintelligent, perhaps even lazy application of a insto rule.
2. Vast bulk of shorts were applied when were in the low 90c zone. Those shorts will be burning /feeling extreme heat right now being approx 30c underwater at time of writing. If I were them I'd be very nervous right about now.
3. The fact that these shorts entered in the low 90c tells me they were uneducated or poorly researched both TA wise as the chart was heavily primed for a rally and FA wise with half a dozen catalysts that could drop at any time that could bring a sharp rally. Which backs up the std rule theory above.
4. It may be that if AVZ rises any more (ie, FA Catalyst arrives ) then they will need to unwind a lot of short positions in a hurry. Translation will be very sharp rally in AVZ pricing as they are forced buy long to cover. This may have already started. Will someone (shorters) lose their Job ? possible/probable.
5. After significant research on possible FA cause for a short position of this size I see still see nothing obvious. The opposite actually. Ive have held AVZ for many years and know the FA story intimately. It would take a "time restricted" insto researcher some considerable time to reach the same level of understanding/insight that many of the long termers here now instinctively have. Which the puts the instos at a considerable disadvantage. You must remember that a team of analyst will need to be across all stocks in the XJO (top 200).
6. Interesting in itself that a shorter would take such a large position in a lithium stalwart and future industry leader in the beginning of such a undeniable lithium market bull and one that shows no abatement or meaningful small supply relief until perhaps the end of this year early next in the short term and the end of the decade if looking longer term. If you follow the industry media and recognized commentators such as Benchmark and Fastmarkets etc. Especially since Rio's Jadar recent project postponement/shelving and Chile Govt recent nationalization movement directed to the Atacama then you would conclude, if anything, supply constraints are going to get tighter still.
7. You will notice that the Shortman chart you posted is 6 days old (was this on purpose!) . Looking at the shortman website today (4 days old) it appears shorters are already starting to unwind.
This chart is below 4 days old
ShortMan - Short position graph for AVZ
