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) remains the most shorted share on the Australian share market for yet another week. The graphite miner has 20.2% of its shares held short amid concerns that its Balama project may not be enjoying as high prices as initially expected.
- Independence Group NL (ASX: IGO) has short interest of 16.9%. Although Independence recently delivered a reasonably solid December quarterly update, it hasn’t been enough to put off short sellers.
- Domino’s Pizza Enterprises Ltd. (ASX: DMP) has short interest of 16.5%. Short sellers will no doubt be pleased with the pizza chain operator’s weak first-half result release last week. Management has, however, held firm its full-year guidance.
- JB Hi-Fi Limited (ASX: JBH) has 14.2% of its shares held short. Although JB Hi-Fi released a decent first-half result last week, short sellers will have been relieved to see that its outlook was reasonably disappointing.
- Healthscope Ltd (ASX: HSO) has short interest of 14%. Last week the private hospital operator reported a disappointing 17% decline in operating net profit after tax to $78.2 million. The private hospital operator also announced a cut to its dividend.
- Retail Food Group Limited (ASX: RFG) has short interest of 12.8%. It appears as though short sellers may expect more bad news out of the embattled food and beverage company when its releases its half-year results later this week.
- HT&E Ltd (ASX: HT1) has 11% of its shares held short. The outdoor advertising company’s half-year result last week led to a sharp increase in its share price, much to the dismay of short sellers.
- Galaxy Resources Limited (ASX: GXY) has 10.7% of its shares held short. Short sellers may be targeting Galaxy due concerns over the potential future oversupply of the metal.
- Mayne Pharma Group Ltd (ASX: MYX) has short interest of 10.3%. The pharmaceutical company is due to release its half-year results later this week which will reveal whether it is still being negatively impacted by pricing pressures in the United States.
- Vocus Group Ltd (ASX: VOC) shares have entered the top 10 with short interest of 10% ahead of its results release later this week. Short sellers appear to be expecting a disappointing result.
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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia owns shares of and has recommended 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.