At the start of each week I like to take a look at which shares are being targeted by short sellers.
As short selling is one of the most risky strategies out there, short sellers will generally only take out a position if they have a high conviction of success. In light of this, I think it is prudent for investors to keep a close eye on short interest levels.
Here are the 10 most shorted shares on the ASX according to data provided by ASIC:
- Syrah Resources Ltd (ASX: SYR) is once again the most shorted share on the ASX with short interest of 21.8%. Short sellers appear concerned that the prices the graphite miner is able to command at its Balama project may not be as high as initially expected.
- Independence Group NL (ASX: IGO) has short interest of 17%. Independence recently delivered a reasonably solid December quarter, but short sellers haven’t been put off.
- Domino’s Pizza Enterprises Ltd. (ASX: DMP) has short interest of 16.2%. Later this week the pizza chain operator will report its half-year results. Short sellers appear to anticipating a soft result.
- Healthscope Ltd (ASX: HSO) has short interest of 13.8%. Tough trading conditions and falling private health insurance participation has weighed on the private hospital operator this year.
- JB Hi-Fi Limited (ASX: JBH) has 13.5% of its shares held short. Later today the retailer will release its half-year results. If they are strong, a short squeeze could potentially occur.
- Retail Food Group Limited (ASX: RFG) shares may have fallen significantly over the last few months but short interest remains high at 12.6%. Some short sellers may not believe the food and beverage company is over the worst of it just yet.
- HT&E Ltd (ASX: HT1) has short interest of 11%. The outdoor advertising company’s shares fell to a 52-week low last week amid concerns over its tax bill and the recent loss of a major contract.
- Greencross Limited (ASX: GXL) has short interest of 10.4%. The integrated pet care company has emerged as a target for short sellers ahead of earnings season, possibly indicating that they predict a weaker-than-expected half-year result.
- Mayne Pharma Group Ltd (ASX: MYX) has short interest of 10.3%. The pharmaceutical company’s shares have come under pressure recently due to price pressures in the lucrative US market. Whilst things aren’t improving in the U.S., they appear to have settled now.
- Galaxy Resources Limited (ASX: GXY) has entered the top ten with 9.9% of its shares held short. The lithium miners have been especially volatile lately due to future oversupply concerns.
Want to avoid shares with high levels of short interest? Then check out these star stocks.
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia owns shares of and has recommended Greencross 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.