At the start of each trading week I like to take a look at which shares are being targeted by 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. 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%….
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At the start of each trading week I like to take a look at which shares are being targeted by 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.
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%. Concerns over supply and demand are likely to be the reason for the negative sentiment.
- Independence Group NL (ASX: IGO) has short interest of 16.9%. Short sellers appear doubtful that Independence will deliver on its production guidance this year.
- Domino’s Pizza Enterprises Ltd. (ASX: DMP) has 15.1% of its shares held short. After missing its guidance in FY 2017, short sellers appear to be expecting something similar in FY 2018.
- JB Hi-Fi Limited (ASX: JBH) has seen short interest fall to 14.4%. Weak consumer spending and the arrival of Amazon may be weighing on its shares.
- Healthscope Ltd (ASX: HSO) has short interest of 12.9%, down for a third week in a row. This could be a sign that investor sentiment is shifting positively for the healthcare company.
- Retail Food Group Limited (ASX: RFG) has short interest of 11.1%, down again week-on-week. But as the data from ASIC is delayed, this is likely to drop even further next week after recent short covering.
- Western Areas Ltd (ASX: WSA) has 9.7% of its shares in the hands of short sellers. Short interest has been falling in recent months due to improved nickel prices.
- Myer Holdings Ltd (ASX: MYR) has short interest of 9.6%. Last month Myer warned that sales were down sharply in December compared to the prior corresponding period. This may lead to the company falling short of expectations in FY 2018.
- Flight Centre Travel Group Ltd (ASX: FLT) has short interest of 9.6%. The travel agent’s shares climbed strongly in 2017 and short sellers may believe they are overvalued now.
- Vocus Group Ltd (ASX: VOC) has entered the top ten with 9.2% of its shares held short. Telco shares have come under pressure over the last 12 months amid concerns over weaker-than-expected NBN margins.
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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 and has recommended Flight Centre Travel Group Limited, Retail Food Group Limited, and Vocus Communications 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.