Do you own any of the 10 most shorted ASX shares?

Every Monday I like to take a look through the data provided by ASIC to see which ASX shares are currently being targeted by short sellers.

Although short sellers will often get it wrong, I believe investors should pay close attention to high levels of short interest as it could be seen as 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 21.7% of its shares held short. Short interest in the lithium miner has continued to climb higher, several weeks after it made a surprising cut to its annual production guidance.
  • Western Areas Ltd (ASX: WSA) has seen its short interest jump to 16.5%. With nickel prices sliding lower, it appears short sellers have become more bearish and increased their positions.
  • Syrah Resources Ltd (ASX: SYR) has short interest of 16.1%, up sharply since last week. At the end of last week the graphite miner released a strong quarterly report which will no doubt give short sellers something to think about this week.
  • Aconex Ltd (ASX: ACX) has 15% of its shares held short. Despite the high level of short interest, the software-as-a-service company’s shares rallied around 12% in April.
  • Vocus Group Ltd (ASX: VOC) now has 13.2% of its shares in the hands of short sellers, up sharply since last week. Whilst I think Vocus looks to be great value at the current share price, the rising short interest is certainly a concern.
  • Myer Holdings Ltd (ASX: MYR) has seen short interest fall again to 12.6%. Whilst no takeover offer from Premier Investments Limited (ASX: PMV) has materialised, the prospect of one has led many short sellers to close their positions.
  • Quintis Ltd (ASX: QIN) has 11.6% of its shares held short. This sandalwood plantation manager has been targeted by short sellers after its business model was compared to a Ponzi scheme by a U.S. research firm.
  • Nine Entertainment Co Holdings Ltd (ASX: NEC) has 11.2% of its shares held short. Considering the shocking performance of rival Ten Network Holdings Limited (ASX: TEN), I can’t say I’m surprised to see short sellers take an interest in Nine Entertainment.
  • Domino’s Pizza Enterprises Ltd. (ASX: DMP) has 10.8% of its shares held short. Although the short interest is a concern, I believe Domino’s could prove to be a great buy and hold investment at the current price.
  • Mayne Pharma Group Ltd (ASX: MYX) has 10.7% of its shares in the hands of short sellers. Whilst there are concerns over price-fixing allegations, I think the pharmaceutical company could be a great option for patient buy and hold investors.

Finally, if you'd prefer to invest in shares with low levels of short interest then look no further than these quality shares. Each is growing like gangbusters and I'm tipping them to smash the market over the next couple of years.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

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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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