Not all investors want share prices to appreciate. Some want them to fall in value and will borrow shares to sell on market with the aim of buying them back at a cheaper price.
These investors are known as short sellers and according to ASIC's most recent data, the 10 most shorted shares on the ASX currently are as follows:
- Myer Holdings Ltd (ASX: MYR) has been the most shorted share on the ASX for some time now and has 16.1% of its shares held short. Short interest has fallen since last week and could continue to fall further if the retailer had a strong Christmas period.
- Aconex Ltd (ASX: ACX) could soon become the most shorted share on the ASX. The software-as-a-service company saw short interest rise to 16% this week. Whilst its shares do appear expensive, I believe it has explosive growth potential that justifies the premium.
- Western Areas Ltd (ASX: WSA) has 12.7% of its shares held short. It would appear that short sellers aren't confident that nickel prices will improve significantly in the year ahead.
- Syrah Resources Ltd (ASX: SYR) has seen short interest drop slightly from last week to 11.3%. Despite this drop short interest in the graphite miner is still close to record highs.
- Nine Entertainment Co Holdings Ltd (ASX: NEC) has 10.8% of its shares in the hands of short sellers. Short interest in the media company has been falling steadily in recent weeks, which could be a sign that investor sentiment is shifting.
- Metcash Limited (ASX: MTS) has 10.6% of its shares held short. Despite the rise in short interest the wholesale distributor's share price has managed to climb 21% in the last two months.
- TFS Corporation Limited (ASX: TFC) has seen short interest drop to 10.4% this week. Despite dropping week on week, short interest in the sandalwood plantation manager is still close to record highs.
- Vocus Communications Limited (ASX: VOC) has 9.2% of its shares held short. Although the telco company's shares have fallen 39% in the last 12 months, some investors appear to believe it can fall further. I wouldn't expect this to happen and believe it is a bargain buy now.
- Nextdc Ltd (ASX: NXT) has 9.2% of its shares in the hands of short sellers. As well as concerns over the launch of a rival data centre operator into the Australian market, investors appear to have concerns over the fact its shares change hands at 461x trailing earnings.
- Bellamy's Australia Ltd (ASX: BAL) has short interest of 9.1%. The infant formula manufacturer is expected to come out of suspension at the end of the week. Short sellers will no doubt be looking forward to that.
