At the start of each week I like to have a quick look at which ASX shares are attracting the most unwanted attention from short sellers.
When an investor shorts a company's shares they are essentially borrowing shares to sell on market, with the aim of buying them back at a lower price further down the line.
But as rewarding as the strategy can be, it is a high risk one with theoretically unlimited losses.
According to data provided by ASIC, at the moment short sellers are betting on the 10 shares below taking a tumble in the coming months:
- Syrah Resources Ltd (ASX: SYR) is still the most shorted share on the ASX with short interest of 20.5%. The graphite miner hasn't let this hold it back. Its shares are up 39% in a month as the commencement of production at Balama draws closer.
- Orocobre Limited (ASX: ORE) has seen its short interest continue to fall, this time to 16.5%. It seems that short sellers have been closing positions in a hurry following a solid full-year result and an increasingly bullish outlook for global lithium demand.
- Independence Group NL (ASX: IGO) has seen its short interest rise again to 15.5%. Production delays and the belief that the gold price may have peaked appear to be behind the rising short interest.
- Myer Holdings Ltd (ASX: MYR) has 14.8% of its shares held short. The department store operator's shares have fallen 48% in 2017 as investors become increasingly bearish on its prospects.
- Western Areas Ltd (ASX: WSA) has seen short interest slide to 14.7%. Nickel prices have been weakening in recent weeks, putting pressure on the nickel producer's shares.
- Retail Food Group Limited (ASX: RFG) has 13.7% of its shares held short. Whilst I think the food and beverage company's performance has been a touch disappointing, it does look to be good value at the current share price.
- Select Harvests Limited (ASX: SHV) has 13.4% of its shares in the hands of short sellers. Short sellers appear to have targeted the almond producer after a disappointing decline in production volumes led to a 73% fall in its reported full-year net profit.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 13.4% of its shares held short. A disappointing full-year result appears to have some short sellers convinced that the pizza chain operator's best days are behind it.
- JB Hi-Fi Limited (ASX: JBH) has short interest of 13.4%. The potential arrival of Amazon in Australia before Christmas appears to be weighing heavily on the retailer and its industry rivals.
- Aconex Ltd (ASX: ACX) has entered the top 10 with short interest of 11.8%. Some short sellers appear unconvinced that the software-as-a-service company can deliver the level of earnings growth that would justify the premium its shares trade at.
