At the start of each week I like to take a look at which ASX shares are attracting the most unwanted interest from short sellers.
When an investor decides to "short" a company's shares, they are borrowing shares to sell on market with the aim of buying them back at a lower price further down the line.
As there is theoretically limitless losses, it is certainly a high-risk investment strategy. But as we have seen with the likes of Bellamy's Australia Ltd (ASX: BAL) and Aconex Ltd (ASX: ACX) this year, it can also be a rewarding strategy.
According to data provided by ASIC, here are the 10 most shorted shares on the ASX this week:
- Myer Holdings Ltd (ASX: MYR) continues to be the most shorted share on the ASX with short interest of 16.9%. Short interest has spiked since last week, possibly indicating that short sellers expect a disappointing half-year result in March.
- Aconex Ltd has once again seen short interest fall. Approximately 15.1% of the software-as-a-service company's shares are held short now.
- Western Areas Ltd (ASX: WSA) has 13.1% of its shares in the hands of short sellers. This is a big jump week-on-week and is likely to be down to the subdued outlook on nickel prices following Indonesia's decision to lift its ban on nickel exports.
- TFS Corporation Limited (ASX: TFC) has short interest of 11.8%, up slightly on last week. The company expects to post adjusted cash EBITDA growth of at least 25% in FY 2017, but judging by its high short interest some investors appear doubtful.
- Vocus Communications Limited (ASX: VOC) has 11.5% of its shares held short. As I said last week, if the telco company delivers a strong half-year result next week I believe there's a reasonable chance we could see a short squeeze.
- Nine Entertainment Co Holdings Ltd (ASX: NEC) continues to be one of the most shorted shares on the ASX. The media company has short interest of 10.4%, up slightly week-on-week.
- Worleyparsons Limited (ASX: WOR) has 10.1% of its shares in the hands of short sellers. The mining services industry is not one that I'm bullish on at this point in time, so I can't say I'm surprised to see short sellers target the company.
- Syrah Resources Ltd (ASX: SYR) has seen short interest rise a touch to 9.9%. The graphite miner's shares have been amongst the worst performers on the ASX in the last six months, dropping 31.5%.
- Mayne Pharma Group Ltd (ASX: MYX) has jumped into the top 10 with short interest of 9.8%. The pharmaceutical company's shares have come under pressure in recent weeks over fears of price-fixing allegations and worries over how President Trump could impact the industry.
- Metcash Limited (ASX: MTS) has seen short interest drop for a fifth week in a row to 9.7%. The drop in short interest could be an indication that the market is becoming a little more bullish on the wholesale distributor.
