At the start of each week 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:…
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At the start of each week 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) is still the most shorted share on the local share market with short interest of 20.1%. Despite this, the graphite producer’s shares have risen 32% over the last 12 months.
- Independence Group NL (ASX: IGO) has short interest of 17.2%. Disappointing production delays last year at its Nova site appears to have weighed on investor sentiment.
- Domino’s Pizza Enterprises Ltd. (ASX: DMP) has 16.1% of its shares held short, up sharply week-on-week. Short sellers may expect Domino’s to deliver another disappointing result this year.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise once again, this time to 15.8%. However, not everyone is bearish on the retailer. Last week Morgan Stanley upgraded it to an overweight rating and added it to its model portfolio.
- Healthscope Ltd (ASX: HSO) has short interest of 13.3%. The healthcare company appears to have been targeted due to its weak outlook and falling private health insurance participation rates.
- Retail Food Group Limited (ASX: RFG) has short interest of 12.3%. Despite its shares losing 66% of their value over the last 12 months, some short sellers must think it can still sink even lower.
- HT&E Ltd (ASX: HT1) has short interest of 9.4%. The outdoor advertising company’s Adshel business recently lost the Yarra Trams contract it had held for six years. This is expected to hit EBITDA by approximately $15 million.
- APN Outdoor Group Ltd (ASX: APO) has 9.4% of its shares held short. Short sellers appear to be especially bearish on the outdoor advertising industry suddenly.
- Flight Centre Travel Group Ltd (ASX: FLT) has re-entered the top ten with short interest of 9.3%. After a strong share price gain over the last 12 months, short sellers may think its shares have run too hard now.
- Myer Holdings Ltd (ASX: MYR) has short interest of 9.1%. Short sellers may be betting that the embattled retailer had a disappointing Christmas trading period.
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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 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.