Short sellers target junior resource stocks, particularly miners and exploration companies, on . These stocks are especially those listed on exchanges like the TSX Venture or ASX. These are prime short-selling candidates for different reasons.
These stocks usually trade at low volumes, making them easier to manipulate. A small amount of selling pressure can trigger significant price declines. Also, retail traders typically own junior resource stocks, especially during a discovery phase. Short sellers exploit these traders’ emotional momentum, expecting the excitement to fade.
Junior resource stocks usually change depending on drill results, permits, assay updates, or funding announcements. The outcomes of these events make them attractive to short sellers who want to time a disappointment.
Resource stocks usually raise capital through private placements or flow-through shares. Short sellers monitor these offerings closely, set a position ahead of dilutive events, or use arbitrage tactics involving share and warrant combos.
