Rudi's View | 10:00 AM
Early observations from early results in Australia. It's been rather mild, and positive, thus far.
By Rudi Filapek-Vandyck, Editor
August 2026 will not be an ordinary, run-of-the-mill results season for the Australian share market.
Early corporate results are already suggesting as much, with several unspectacular financial performances being well received, while others are being punished heavily for falling short of perfection.
The easiest prediction to make at this stage is that investors had better prepare for another wild ride, albeit one for which the risks may be skewed to the upside.
Last week, Pinnacle Investment Management ((PNI)) released a rather "messy" FY26 report, combining multiple misses with offsetting positive surprises.
Its share price rallied strongly and --equally important-- has largely held on to those gains.
Before that market update, Pinnacle shares were down circa -35% from twelve months earlier, while FNArena's consensus price target had remained stoically above $22, or some 46% higher.
In the blink of an eye, Pinnacle shares have more than halved that gap.
On Monday, a similar knee-jerk rally pushed Car Group ((CAR)) shares higher following another less-than-spectacular FY26 release with initial guidance for the year ahead.
Clearly, expectations have become too negative in some cases.
There may be an additional twist in Car Group's case. According to ASIC's most recent update, as at 4 August, reported short positions represented no less than 11.70% of the company's issued shares.
When hedge funds and traders establish short positions, they are seeking to profit from a falling share price.
Could updates from companies such as Pinnacle and Car Group simply have been "good enough" to undermine the bearish thesis underpinning at least some of those positions?
We will have to wait another week before updated ASIC data provide clearer insight, but my suspicion is that an 9.9% rally in Car Group shares following an otherwise okay result and outlook probably involved at least some short covering.
When short sellers decide it is no longer beneficial to remain short a stock, they must buy shares to cover their positions.
Not everything that moves this month can be linked to short covering, but reported short positions in Treasury Wine Estates ((TWE)) represented more than 10.5% of its issued shares.
Those shares rallied by 9% after management guided to FY27 EBITS being "at least in line" with FY26.
These early observations suggest it may be worth taking a peek at which stocks are heavily shorted.
FNArena's Short Report is updated daily using data collected by ASIC:
https://fnarena.com/index.php/analysis-data/the-short-report/
DroneShield ((DRO)) is currently the most shorted ASX-listed ordinary share, at more than 15%, while 4DMedical ((4DX)) and Domino's Pizza Enterprises ((DMP)) are each more than 12.5% shorted.
They are followed by Lotus Resources ((LOT)), Boss Energy ((BOE)), then Car Group in sixth place.
The following eight companies each have reported short positions exceeding 10%: Flight Centre Travel ((FLT)), Paladin Energy ((PDN)), Telix Pharmaceuticals ((TLX)), Healius ((HLS)), Treasury Wine Estates, Elders ((ELD)), Lynas Rare Earths ((LYC)) and PLS Group ((PLS)).
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