Every Monday I like to take a look at ASIC's short position report to find out which ASX shares short sellers believe may fall in value over the next few months.
Although they don't always get it right, I still believe it is important to consider short interest prior to making an investment.
At the moment short sellers are betting on the 10 shares below taking a tumble:
- Syrah Resources Ltd (ASX: SYR) remains the most shorted share on the ASX with 19.4% of its shares held short. Short sellers appear to believe that the graphite miner's massive Balama project will add too much supply and weigh on prices.
- Independence Group NL (ASX: IGO) has seen its short interest slide to 18.2%. As well as its production delays, short sellers may be bearish on the gold miner due to the prospect of rising rates in the United States.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has seen short interest fade slightly to 15.1%. Last week the pizza chain operator's shares continued to rebound thanks partly to the acquisition of Hallo Pizza in Germany.
- JB Hi-Fi Limited (ASX: JBH) has short interest of 14.7%. The imminent arrival of Amazon in Australia is likely to be why short sellers are so bearish on the retailer. I would stay away from JB Hi-Fi at this point.
- Healthscope Ltd (ASX: HSO) has short interest of 13%. Short sellers appear to believe its shares are expensive given its recent dividend cut and forecast for flat EBITDA in FY 2018.
- Western Areas Ltd (ASX: WSA) has seen its short interest ease again to 12.9%. A positive global outlook on nickel prices is likely to have been the reason for the fall in short interest.
- Retail Food Group Limited (ASX: RFG) has 12.8% of its shares held short. Although its performance this year was slightly disappointing, I think the share price decline has been overdone and it could be worth a closer look now.
- Orocobre Limited (ASX: ORE) has seen short interest slide again, this time to 12.7%. Short sellers appear to be closing their positions due to the increasingly bullish outlook for global lithium demand.
- Myer Holdings Ltd (ASX: MYR) has 12.2% of its shares held short. After a sharp drop over the last few weeks, short interest has now stabilised ahead of its AGM.
- Galaxy Resources Limited (ASX: GXY) has 11.3% of its shares held short. Short sellers may believe that the lithium miner's shares have run too hard. Its shares have more than doubled in the last three months.
