Whilst the majority of investors want share prices to appreciate, not all of them do. Some will borrow shares to sell on market with the aim of buying them back at a cheaper price further down the line. This risky investment strategy is known as short selling or shorting.
According to the most recent data provided by ASIC, the 10 most shorted shares on the ASX at present are as follows:
- Aconex Ltd (ASX: ACX) has become the most shorted share on the ASX after short interest in the software-as-a-service company jumped to 16.8%. Whilst I think Aconex is a great long-term investment, this level of short interest is admittedly a concern.
- Myer Holdings Ltd (ASX: MYR) may have lost the top spot at long last, but it wasn't due to a drop in short interest. The department store operator actually saw short interest rise slightly week on week to 16.3%.
- Western Areas Ltd (ASX: WSA) has 12.4% of its shares held short. Last week Indonesia lifted its ban on nickel exports. I expect this to hold down prices for the medium-term, much to the disappointment of this leading nickel producer.
- TFS Corporation Limited (ASX: TFC) has seen short interest rise sharply to 11.9% this week. The sandalwood plantation manager continues to be a favourite of Australian short sellers.
- Syrah Resources Ltd (ASX: SYR) has 11.6% of its shares held short. Although the graphite miner's share price has fallen 40% in the last six months, it would appear as though short sellers think it can still go lower.
- Nine Entertainment Co Holdings Ltd (ASX: NEC) is once again being targeted by short sellers. Short interest in the media company's shares has risen week on week to 11.2%.
- Metcash Limited (ASX: MTS) has seen a small drop in short interest to 10.4%. This drop could be a sign that investor sentiment could be shifting positively for the wholesale distributor.
- Vocus Communications Limited (ASX: VOC) has 10% of its shares held short, up sharply from last week. Despite the rise in short interest I still feel it is one of the biggest bargain buys on the ASX right now.
- Worleyparsons Limited (ASX: WOR) has jumped back into the top 10 with short interest of 9.4%. With competition fierce and margins low, I would avoid Worleyparsons and other mining services companies.
- News Corp (ASX: NWS) is another new entry into the top 10 with 9.4% of its shares held short. Worryingly for shareholders short interest in the media company has been building steadily in recent months.
