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.
