Each Monday I like to take a look at the shares that short sellers expect to tumble in value in the near future.
Today I thought I would take a look to see if high levels of short interest are anything to be concerned about.
To do so I've gone back six months and checked on the performance of the most shorted ASX shares at that point in time.
Here's how they have performed:
The Myer Holdings Ltd (ASX: MYR) share price has tumbled 39% in the last six months. Tough retail conditions and weaker-than-expected full-year guidance have been largely behind the sharp decline.
The Aconex Ltd (ASX: ACX) share price has gained 25% in the last six months, much to the dismay of short sellers. Though long-term short sellers won't mind too much, the software-as-a-service company's shares are still down 49% in the last 12 months.
The Quintis Ltd (ASX: QIN) share price has plunged 81% over the period. This collapse was undoubtedly a big win for short sellers and Glaucus Inc in particular. The research firm described the sandalwood plantation manager as operating a Ponzi-like business earlier this year.
The Western Areas Ltd (ASX: WSA) share price is down just under 10% in the last six months. Weak nickel prices and a subdued outlook have weighed heavily on its shares during this time.
The Vocus Group Ltd (ASX: VOC) share price is down 13% during the period. The telco company's shares were down significantly more before a recent takeover offer helped bump up its share price.
The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price is up 57% in the last six months and just hit a new 52-week high yesterday. The federal government's plan to lower the annual licence fee has been partly to thank for this gain.
The Worleyparsons Limited (ASX: WOR) share price has gained 29% over the last six months. It appears as though short sellers failed to anticipate a recovery in oil and gas capital expenditures.
The Monadelphous Group Limited (ASX: MND) share price has gained 45% during the period. Much like Worleyparsons, short sellers have been burnt by their failure to see improvements in oil and gas capital expenditures.
The Metcash Limited (ASX: MTS) share price is up 25% in the last six months and at a two-year high. At one stage it appeared as though short sellers had made the correct call, but a stronger-than-expected full-year result changed all that and sent its shares hurtling higher.
The Syrah Resources Ltd (ASX: SYR) share price is down 9% in the last six months. Production delays at the graphite miner's massive Balama project have weighed heavily on its shares this year.
Foolish takeaway
Although short sellers got five out of the ten calls right, an equally weighted portfolio of these ten shares would have provided investors with a return of almost 3% over the six months. By comparison the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) gained 2.7% during the period.
