Once a week I like to take a look at which shares are being targeted by short sellers.
Although it is a high risk strategy, as we have seen recently with Retail Food Group Limited (ASX: RFG), it can at times be a very rewarding one.
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 short interest of 21.3%. Short sellers continue to believe that Syrah's massive graphite project will disrupt the supply and demand balance.
- Independence Group NL (ASX: IGO) has short interest of 17.2%. Short sellers may be betting on Independence falling short of its production guidance this year.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 16.2% of its shares held short. The pizza chain operator had a disappointing FY 2017 and short sellers appear to believe FY 2018 could be equally disappointing.
- JB Hi-Fi Limited (ASX: JBH) has seen short interest rise again to 16%. The arrival of Amazon in Australia seems to have many investors concerned about this retailer's future performance.
- Healthscope Ltd (ASX: HSO) has short interest of 13.3%, down sharply for a second week in a row. The healthcare company was targeted amid falling private health insurance participation rates.
- Retail Food Group Limited has short interest of 12%, down sharply week-on-week. As there is a delay to this data from ASIC, I suspect next week will reveal an even bigger drop. Last week short sellers appeared to be covering positions to lock in sizeable gains.
- Ardent Leisure Group (ASX: AAD) has 10.7% of its shares held short. With the market responding positively to the sale of its bowling business, short sellers may want to be careful with this one.
- Myer Holdings Ltd (ASX: MYR) has returned to the top ten with short interest of 9.7%. Earlier this month Myer warned that sales were down sharply in December compared to the prior corresponding period.
- Flight Centre Travel Group Ltd (ASX: FLT) is another new addition to the top ten with short interest of 9.6%. The travel agent's shares have run hard this year and short sellers may believe they are overvalued now.
- Western Areas Ltd (ASX: WSA) has 9.5% of its shares in the hands of short sellers, down sharply week-on-week. Short interest continues to fall as nickel prices improve.
