Every Monday I like to start the week with a quick look at which shares are being targeted by short sellers.
When an investor shorts a company's shares it means 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. Last year there were some big wins for short sellers, proving time and time again that it pays to keep an eye on what they are doing.
According to data provided by ASIC, short sellers are betting on the 10 shares below taking a tumble in the coming months:
- Syrah Resources Ltd (ASX: SYR) continues to be the most shorted share on the ASX with short interest of 21%. Last week Syrah provided another positive sales update, sending its shares to a 52-week high in spite of the high level of short interest.
- Independence Group NL (ASX: IGO) has short interest of 18%. Independence suffered from production delays last year and short sellers appear to expect similar this year.
- JB Hi-Fi Limited (ASX: JBH) has seen short interest rise to 15.2%. Weak consumer spending and the arrival of Amazon continue to weigh on investor sentiment.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 14.9% of its shares held short. Short sellers appear to expect Domino's to disappoint again this year.
- Healthscope Ltd (ASX: HSO) has short interest of 13.3%. The healthcare company has been targeted partly due to falling private health insurance participation rates.
- Retail Food Group Limited (ASX: RFG) has short interest of 12.4%. Short interest in the food and beverage company has rebounded, possibly indicating that traders aren't convinced that the worst is behind it.
- HT&E Ltd (ASX: HT1) has entered the top ten with short interest of 10%. Late last year the outdoor advertising company's Adshel business lost the Yarra Trams contract it had held for six years, leading management to forecast a $15 million hit to its EBITDA.
- APN Outdoor Group Ltd (ASX: APO) is another outdoor advertising company landing in the top ten this week. APN Outdoor has 9.8% of its shares held short.
- Western Areas Ltd (ASX: WSA) has 9.5% of its shares in the hands of short sellers. Short interest has been falling in recent months due to improving nickel prices thanks to its use in renewable batteries.
- Myer Holdings Ltd (ASX: MYR) has short interest of 9.4%. Despite its sharp share price decline, short sellers appear to believe the embattled retailer could still fall further following a weak business performance in December.
