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 ASX share with 22.7% of its shares held short. Some traders appear to believe that the graphite miner’s massive Balama Project will lead to an oversupply of the battery material.
- Independence Group NL (ASX: IGO) has seen its short interest continue to climb, this time to 19.2%. A disappointing FY 2017 and a potential rate rise in the United States may be the reason for the short interest.
- Domino’s Pizza Enterprises Ltd. (ASX: DMP) has seen short interest rise to 16.2%. Despite its sizeable decline this year, short sellers appear to believe its shares are still trading on an excessively high earnings multiple.
- JB Hi-Fi Limited (ASX: JBH) has 15.9% of its shares held short. With Amazon expected to launch later this month, I can’t say I’m surprised to see short sellers target the electronics retailer.
- Healthscope Ltd (ASX: HSO) has short interest of 14.9%. The private hospital operator has come under pressure following the release of weak FY 2018 guidance and declines in private health insurance participation.
- Orocobre Limited (ASX: ORE) has 13.5% of its shares held short. The lithium miner’s short interest has started to creep higher after months of declines. This may be due to its shares rising over 70% higher during the last three months.
- Retail Food Group Limited (ASX: RFG) has seen short interest rise slightly to 12.2%. Short sellers continue to target the food and beverage company despite its shares being down 35% year-to-date.
- Western Areas Ltd (ASX: WSA) has seen its short interest remain steady at 11.8%. I suspect that short sellers may start to close their positions in the near future due to the increasingly bullish outlook for nickel due to its use in electric vehicle batteries.
- Aconex Ltd (ASX: ACX) has seen its short interest slide to 11.1%. The software-as-a-service company is due to hold its AGM this week, giving investors a peak into how it is performing in FY 2018.
- Metcash Limited (ASX: MTS) has entered the top 10 with short interest of 11.1%. The wholesale distributor is another that has being tipped to be impacted by an Amazon launch.
Instead of investing in Metcash, I would suggest investors consider these top shares which I would class as Amazon-proof.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of ACONEX FPO and Retail Food Group 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.