WEEKLY: What's Short On The ASX?

A crop protection and seed technologies company, Nufarm (NUF.AX) is currently trading at A$4.35 down -27% in 2019 - having once traded as high A$9.50 in early 2018. The company, which manufactures and sells a range of herbicides, insecticides and fungicides across multiple continents, has seen its share price dip over the past few years driven by a combination of issues including extended dry weather conditions, product issues and the use of glyphosate.

On Jul-23 2018, NUF dropped -11% after it shaved its profit guidance. Not long after, NUF also fell -13% when news emerged that one of its weedkillers might be causing cancer. Earlier this year, NUF announced that its Australian business was facing ongoing challenges; the stock went -24%. The stock's earnings face some hurdles in the foreseeable future with Australia's drought persistent, some crop disruptions overseas and its use of glyphosate, a potentially cancer causing chemical under regulatory review. 
 

Inghams Group Ltd (ING.AX)

An Australian-based integrated poultry producer, Inghams is currently one of the most shorted stocks on the ASX as gauged by the short sell ratio. Since Q1 2019, considerable pressure has been put on the poultry giant with sentiment having turned extremely negative following a string of poor results. 
 
On February 28th, Ingham's shares dropped -11.2% after half-year net profits came out -5.3% lower. While, in April, their shares were smacked down again after news broke that a major shareholder, private equity firm TPG Capital, was seeking to offload a sizable stake. Ingham's latest financials which gave a bleak FY2020 outlook for profit margins saw shares also drop as low as A$3.21, -17%.

Subdued sentiment appears to be sticking around with ING.AX for the time being with the average recommendation on the street at neutral. Look for support at Jan 2017 lows (3.02).
 

 

Bellamys Organic (BAL.AX)

Bellamy's Organic, an Australian darling in 2017 and major baby formula exporter to Asia, recently doubled its share price, +52%, after Chinese company China Mengniu announced a $983mn takeover bid for the company. This action has since seen short covering across the board as speculators mull the likelihood that the bid will overcome regulatory foreign investment hurdles. 

Bellamy Organic's Board of Directors have unanimously recommended the deal to the company's shareholders and will subsequently put it forward to a vote. Should the deal clear all obstacles, shareholders are set to receive ~A$13.25 cash per share held from the scheme. If it fails to pass FIRB's (Foreign Investment Review Board) sniff test, who have rejected major deals in the past - Huawei, CKI - BAL.AX will certainly fall back to pre-bid levels around A$8.40. 

Update: BAL has since fallen out of the top 3 most shorted stocks on the ASX with its short sell ratio currently at 6.5%, down from 15%.