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

Every Monday morning I like to start the week with a look at ASIC’s short position report in order to find out which shares are being targeted by short sellers.

A short seller will borrow shares to sell on market, with the aim of buying them back at a lower price in the future and pocketing the difference.

As it is a high risk strategy with the potential for limitless losses, short sellers will often only take a short position if they believe they have a high probability of success. For this reason I believe it is prudent for investors to keep a close eye on short interest levels.

According to data provided by ASIC, here are the 10 most shorted shares on the ASX this week:

  • Aconex Ltd (ASX: ACX) remains the most shorted share on the ASX with short interest rising to a record 17.7%. Whilst I am a big fan of the software-as-a-service company, the rising short interest is a concern.
  • Western Areas Ltd (ASX: WSA) has seen short interest spike to 16.4%. With nickel prices likely to remain subdued for some time to come, I can’t say I’m surprised to see short sellers target the miner.
  • Myer Holdings Ltd (ASX: MYR) has seen short interest drop for a second week in a row. The department store operator now has 15.6% of its shares held short.
  • Orocobre Limited (ASX: ORE) now has 15.4% of its shares in the hands of short sellers. Investors appear to have become increasingly bearish on the lithium miner’s prospects since it cut its annual production guidance.
  • TFS Corporation Limited (ASX: TFC) has 14.1% of its shares held short. Short interest in the sandalwood plantation manager has risen slightly week-on-week.
  • Syrah Resources Ltd (ASX: SYR) has seen short interest rise to 13.5%. The graphite miner’s share price may have fallen 42% in the last six months, but some investors appear to believe it could still fall lower.
  • Vocus Group Ltd (ASX: VOC) has seen its short interest rise slightly to 11.8%. So far this year the telco company’s shares have defied short sellers, rising almost 10% year-to-date.
  • Nine Entertainment Co Holdings Ltd (ASX: NEC) has 10.9% of its shares held short, down slightly on last week. The media company’s share price has fallen 31% since this time last year.
  • iSentia Group Ltd (ASX: ISD) is a new addition to the top 10 with short interest of 10.3%. After a poor first-half result, short sellers don’t appear to believe a turnaround is coming any time soon.
  • Metcash Limited (ASX: MTS) has 10.2% of its shares in the hands of short sellers. Short interest in the wholesale distributor has held steady since last week.

If you'd prefer to invest in shares with lower levels of short interest then look no further than these rapidly growing shares.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of ACONEX FPO. 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.

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