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Over time there have been a number of postings about the short interest in EWC.
I thought I might try to summarise the short activity using available data.

Using the data provided by ASIC and others I have found the following points of interesting;
1. The average short price is around 41 cents i.e. if EWC rises over 41 cents the shorters loose (Note I have not included the costs of shorting in this calculation i.e. stock lending costs, etc. which would make the break even lower by between 5 and 8 cents.
2. The recent high was 55.4 mill shares short and this rose rapidly from around 50 mill shares during the latter stages in May(see further comments below).
3. Days to cover (91days) are more than twice as high as the next short (41 days) on the ASX according to broker research (note on our estimates between 20% and 30% of daily volume is not real volume just being traded between algos, bots and other put throughs) i.e. the real days to cover may take much longer (up to 120 days).

The Short interest significantly increased and peaked during the June quarter (likely in an attempt to push EWC price down to maximise bonuses at quarter end). This is easy to establish by considering the gross short activity together with the net short changes (many of which are misleading on a day to day basis but provide a clear picture over time).

Gross short activity before June quarter end, but particularly as the share price fell through 20 cents and down to 14 cents virtually doubled in size compared to the passed activity. Activity continued until the end of June after which gross short activity has almost stopped with average daily gross shorts in July being 9,800 per day. The average daily May gross short when the share price dropped materially was 350,000 per day.

As mentioned above since the end of July a major change has occurred with shorts attempting to buy back shares and a decrease in the short position (this may be related to the reduction in the supply of stock available for shorting (which I understand occurred in early July) or it could be a recognition of the major progress being made by EWC over the last months)

My understanding is that the increase in shorts from around 40 mill to 55 mill has been matched by buying by long term holders who are unlikely to sell until the company has delivered on its strategy. This would mean a significantly higher share price than the current 25 cents given the current net asset value of the company is more than 40 cents per share and the replacement costs being even higher again.

The supply of stock therefore to cover the short is likely to be much lower than expected meaning the size of the short as a percentage of available stock is likely to be considerably higher than the 8% reported by the brokers.

Although to date the shorters have had a field day with EWC because of delays etc., it will be very interesting to see how this large short (looking like the biggest on the ASX in terms of days to cover and as a percentage of readily available stock) plays out when EWC completes its current funding round and then proceeds with completing and commissioning of the plants (note that the hub is now funded and moving full steam ahead to completion while the power asset await the final sign off for funding which I expect to be in the near term).

I think being long at this point is a far better bet than being short.

Good luck to all happy punters.

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