Which big shorts are getting bigger?

For most investors, the goal is to find an asset (such as shares in a company) whose value will be significantly higher in the future than what you paid for it or to “buy low, sell high” as they say.

There exists, however, a small group of people who are trying to do the opposite.

Each day, they wake up and rather than think “what’s going up?”, they instead look for companies whose share price will fall and try to profit from that.

These people are called short sellers.

Short selling remains a controversial activity with some believing it hurts markets and/or companies, while others believe they help improve liquidity and act as real-time watchdogs helping shine a light on bad businesses and their practices.

Regardless of your view, watching what they are doing and who they are betting against can be a helpful data point in finding new investment opportunities or avoiding bad ones.

With the calendar year now 75% done, it seemed like a good time to check in with our purveyors of the dark art of short selling.

It’s not like the books and movies

Although business books and movies have done a good job of painting short sellers as heralds of financial doom, the truth is much more nuanced.

Firstly, short selling is hard.

Not only are short sellers not immune to getting it wrong, sometimes they even lost money when they were right as the time it took for the share price to collapse took too long and/or was preceded by a rapid increase in the share price.

Secondly, it isn’t unusual to have short sellers on your share register.

Almost every company on the ASX has at least part of their share issuance sold. The existence of a short seller is, there for, not very interesting. What is interesting though is where the percentage of shares being sold short is significant. The, ahem, big shorts if you will.

Searching the shadows

Thankfully, it isn’t hard to collect data on Australian short selling activity with ASIC producing daily reports on how much of an ASX-listed company’s share issuance is sold short.

As part of this exercise, I took the year-to-date data, which captures the data from 1 January to 24 September 2025 and calculated the average short interest for each ASX-listed company.

I then removed all companies whose average short interest for the year so far was less than 5%.

I then took the latest figures and compared that against the average to see which of the most shorted companies had seen the biggest increase and decrease from that average position.

The big shorts

Despite hovering between 3% and 4% for most of the year, short interest in Iluka Resources (ASX: ILU) spiked in late July. In August, in its half year result announcement, the company would discuss multiple factors that are leading to a difficult trading environment. In September, Iluka would announce the suspension of operations in one of its mines.

Mexican fast-food chain, Guzman Y Gomez (ASX: GYG), has been no stranger to short sellers since it joined the ASX in June 2024. While some have been bullish on the company, others remain concerned about its valuation and question how successful its international expansion will be.

Once a small-cap darling, PWR Holdings (ASX: PWH), who supply advanced cooling equipment to Formula 1 racing teams amongst other markets, has recently been one of the ASX’s most shorted companies. With significant investment into a new facility, impacting production capacity, and some large programs ending, 2025 was always going to be a transition year, but the market could be expecting further disruption in the year ahead.

Aussie travel icon, Flight Centre (ASX: FLT), has seen its short interest spike in late August following its full-year result. Not only was underlying profit before tax down almost 10%, but chief executive, Graham Turner, also listed a number of factors that has been impacted the company’s performance and will likely continue to do so into the 2026 financial year.

Finally, medtech company, Nanosonics (ASX: NAN), has seen short interest steadily build since May as the company’s share price rebounded after a difficult few year. Not only did this get people questioning Nanosonic’s growth prospects, but it placed the magnifying glass on the launch of its new product CORIS and how successful that will be.

Declining pressure?

Just as short sellers are putting more pressure on some companies, others have seen that pressure dissipate.

The biggest example was the technology business, Megaport (ASX: MP1). Short interest peaked in January. However, this steadily declined as the share price of the “network-as-a-service” provider steadily climbed.

After hovering around 10% for most of the year so far, short interest in Lynas Rare Earths (ASX: LYC), started to decline in late April. This appears to line up with the release of its quarterly report that, while discussing challenging market conditions, also discussed an improvement in the average selling price of rare earth products.

Short interest in Syrah Resources (ASX: SYR) peaked in February at 13.3% as protest actions at its Balama graphite mine in Mozambique disrupted production leading the company to declare force majeure as well as just general difficult trading conditions.

Casino operator, The Star Entertainment Group (ASX: SGR), has been in the midst of a saga about whether it would go bankrupt or be taken over for much of the year. A crackdown by regulators significantly impacted the company’s ability to operate leaving its viability in question. However, with a party, US-based Bally’s, interested in trying to resurrect the business plus a recent reprieve from bankers, it appears short sellers are moving on.

Building and restoration business, John’s Lyng (ASX: JLG), is also likely to continue seeing its share interest fall after entering a scheme of arrangement with an entity owned by Pacific Equity Partners, meaning it could soon be acquired by the private equity company.