Each Monday I like to start the week with 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 borrowing shares to sell on market with the aim of buying them back at a lower price further down the line and pocketing the difference. But as rewarding as the strategy can be, it is a high risk one with theoretically limitless losses.
At the moment short sellers are betting on the 10 shares below taking a tumble in the coming months:
- Syrah Resources Ltd (ASX: SYR) continues as the most shorted share on the ASX with 21.6% of its shares held short. Short sellers appear concerned that Syrah's massive graphite project will disrupt the supply and demand balance, causing prices to decline.
- Independence Group NL (ASX: IGO) has short interest of 17.1%. Short sellers continue to target the miner despite improving nickel prices.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 16.7% of its shares held short. The shares of the former market darling have come under significant pressure since the company fell short of its FY 2017 guidance.
- JB Hi-Fi Limited (ASX: JBH) has seen short interest rise slightly to 15.7%. Although Amazon's launch was a little underwhelming, short sellers don't appear to believe the retailer is out of the woods just yet.
- Healthscope Ltd (ASX: HSO) has short interest of 13.8%, down sharply week-on-week Unfortunately for short sellers, Healthscope's shares have rallied almost 10% higher since this time last week.
- Retail Food Group Limited (ASX: RFG) has short interest of 12.8%. The embattled food and beverage company fell from grace last week after negative media reports emerged. There are concerns this could make it harder for it to sell its franchises in the future.
- Ardent Leisure Group (ASX: AAD) has 11.3% of its shares held short. A slowdown in the growth of its US-based Main Event business appears to have caught the eye of short sellers.
- APN Outdoor Group Ltd (ASX: APO) has short interest of 10.3%. The advertising company has come under pressure since it lost a major Yarra Trams contract that had been worth $7 million in EBITDA annually.
- Western Areas Ltd (ASX: WSA) has 10.3% of its shares in the hands of short sellers. Short interest has been falling steadily as nickel prices improve.
- Aconex Ltd (ASX: ACX) has short interest of 10.3%. Short sellers may be disappointed to learn that US giant Oracle has just offered $7.80 per share to acquire the tech company.
