Each Monday 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 are theoretically limitless losses, it is a high-risk investment strategy. But as we have seen many times this year, it can also be a rewarding strategy.
According to data provided by ASIC, these are the 10 most shorted shares on the ASX this week:
- Orocobre Limited (ASX: ORE) continues to be the most shorted share on the ASX with 21.2% of its shares held short. Even though the lithium miner's shares are down 27% year-to-date, some investors appear to believe they can fall further.
- Western Areas Ltd (ASX: WSA) has seen its short interest fall to 15.5%. With nickel prices falling to a 10-month low last week, it's not surprising to see short sellers target the leading nickel producer.
- Syrah Resources Ltd (ASX: SYR) has short interest of 15.3%, down sharply from last week. Short sellers appear to be closing their positions following the release of a strong quarterly report from the graphite miner.
- Vocus Group Ltd (ASX: VOC) has 14.3% of its shares in the hands of short sellers. This is a reasonably big increase on last week's numbers. Vocus certainly looks to be good value at the current share price, but the rising short interest continues to be a concern.
- Aconex Ltd (ASX: ACX) has 14.2% of its shares held short. Short interest in the software-as-a-service company has fallen sharply in the last couple of months. I think this could be a sign that investors believe the worst is behind the company now.
- Myer Holdings Ltd (ASX: MYR) has continued to see short interest fall lower. The department store operator now has 12.6% of its shares held short. The prospect of a takeover offer from Premier Investments Limited (ASX: PMV) appears to have short sellers concerned.
- Quintis Ltd (ASX: QIN) has 11.7% of its shares held short. This sandalwood plantation manager's shares have fallen almost 22% since its business model was compared to a Ponzi scheme by a U.S. research firm.
- Mayne Pharma Group Ltd (ASX: MYX) has 10.9% of its shares in the hands of short sellers. Whilst I still like the pharmaceutical company as a buy and hold investment, the rising short interest is a worry.
- Nine Entertainment Co Holdings Ltd (ASX: NEC) has 10.7% of its shares held short. Despite the high levels of short interest the media company's shares are up 23% year-to-date.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 10.5% of its shares in the hands of short sellers. Short sellers appear to have taken an interest in the company following allegations that franchisees were not paying staff.
