Do you own the 10 most shorted shares on the ASX?

Whilst most investors are focused purely on rising share prices, there are investors out there that are making bets on share prices falling.

“Short-sellers” will borrow shares to sell on market in the hope of buying them back at a cheaper price in the future.

It’s certainly not for the faint hearted though. When you buy shares in the hope that they rise in price, your potential losses are limited to your original investment. Whereas when you short a share those losses are theoretically infinite.

Every trading day ASIC releases the short positions held on all ASX shares a week earlier. According to its most recent release these are the 10 most shorted shares on the ASX:

News Corp (ASX: NWS) is the most shorted share on the ASX with 17.3% of the media giant’s non-voting shares held short currently. Around 6% of its class B voting shares are also held short.

Myer Holdings Ltd (ASX: MYR) is the second-most shorted share with 15.5% of its shares shorted. This number has been steadily reducing in the last couple of weeks, possibly due to the fact the retailer’s full year results will be released imminently.

Worleyparsons Limited (ASX: WOR) has 15% of its shares shorted currently. Despite this the provider of services to the hydrocarbon, minerals, metals, chemicals and infrastructure sector has been one of the best performers on the ASX this year with a 70% gain.

Monadelphous Group Limited (ASX: MND) has 11.5% of its shares shorted. Short sellers have evidently taken a liking to the mining services company in recent times. Its short interest has been rising steadily over the last few weeks.

Metcash Limited (ASX: MTS) currently has 10.8% of its shares shorted. The wholesaler and distributor has seen the number of shorts decrease from over 15% in the last couple of weeks, which could be interpreted as a sign of optimism.

Flight Centre Travel Group Ltd (ASX: FLT) has 10.6% of its shares shorted. The travel agent is another share which has seen a reduction in short interest in the last couple of weeks.

Western Areas Ltd (ASX: WSA) has 10.3% of its shares held short. The nickel producer has come under a lot of pressure in recent times due to the sharp fall in nickel prices in the last couple of years.

Bellamy’s Australia Ltd (ASX: BAL) has 10% of its shares shorted. The organic infant formula producer started the year with just 0.4% of its shares held short, but concerns over changes to Chinese regulations appear to have caused a spike in short interest.

Nextdc Ltd (ASX: NXT) has 9.5% of its shares shorted. This was a big mover in the list, as just a day earlier only 3.2% of the data centre operator’s shares were held short.

Alumina Limited (ASX: AWC) has 9.4% of its shares held short. Alumina’s short interest has remained steady all year. But having settled its dispute with US mining giant Alcoa I wouldn’t be surprised to see its short interest start to decline.

Finally, if you're looking for investment ideas today then look no further than these three new breed blue chips. Their strong earnings and growing, fully franked dividends make them fantastic buys in my opinion.

Why These 3 Blue Chip Shares Are Set to Soar in 2016

Discover The Motley Fool's Top 3 blue chips for 2016. These 3 'new breed' shares pay fully franked dividends AND offer the prospect of significant capital appreciation. Simply click here to gain access to this comprehensive FREE investment report.

No credit card required!

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Bellamy's Australia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

HOT OFF THE PRESSES: My #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.