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

At the start of each week I like to take a look at data provided by ASIC to see which ASX shares are currently being targeted by short sellers.

While short sellers will often get it wrong, I believe it is prudent for investors to pay close attention to high short interest as it could be an early warning sign of a share price decline.

At present these are the 10 most shorted shares on the ASX:

  • Orocobre Limited (ASX: ORE) is once again the most shorted share on the ASX with a whopping 22.4% of its shares held short. Short sellers have been targeting the lithium miner since it reduced its full-year production guidance.
  • Western Areas Ltd (ASX: WSA) has seen its short interest jump to 17.5%. The outlook for nickel prices looks increasingly bleak with speculation that Indonesia and the Philippines will soon lift their export bans.
  • Syrah Resources Ltd (ASX: SYR) has short interest of 16.2%, up sharply from last week. Despite the high level of short interest, the graphite miner’s shares have rallied 7.5% in the last 30 days.
  • Vocus Group Ltd (ASX: VOC) has short interest of 15.3%, which is the highest level this year. Despite its share price falling sharply this year, some investors appear to believe it could yet fall further.
  • Aconex Ltd (ASX: ACX) has 13.7% of its shares held short. Short interest in the software-as-a-service company continues to fall, possibly hinting that investors believe the worst is behind the company now.
  • Myer Holdings Ltd (ASX: MYR) has seen short interest rebound. The department store operator now has 12.7% of its shares held short following last week’s disappointing quarterly update.
  • Mayne Pharma Group Ltd (ASX: MYX) has 12.1% of its shares in the hands of short sellers. Whilst I think the pharmaceutical company could be a good buy and hold investment option, the rising short interest is a worry. Investors may want to hold back for the time being.
  • Quintis Ltd (ASX: QIN) has 11.4% of its shares held short. Short sellers will have been celebrating this weekend after the sandalwood plantation manager’s shares fell a massive 73% last week.
  • Independence Group NL (ASX: IGO) is a new addition to the top 10 with short interest of 11.3%. Production delays at its Nova mine have been a big disappointment this year, weighing heavily on its share price.
  • Bellamy’s Australia Ltd (ASX: BAL) has jumped into the top 10 with short interest of 11.1%. With the infant formula company’s shares up a remarkable 34% in the last 30 days without any meaningful news, it seems as though short sellers think it could be at risk of declines now.

If you'd prefer to invest in shares with lower levels of short interest then I would highly recommend these growth shares today.

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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 and Vocus Communications Limited. 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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