At the start of each week I like to look at which shares are being targeted by short sellers.
As short selling is one of the riskiest strategies out there, short sellers will generally only take out a position if they have a high conviction of success. Considering 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) continues its run as the most shorted share on the ASX with short interest of 20.6%. Syrah has been targeted due to concerns over the impact its massive Balama project will have on graphite prices.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has seen its short interest rise once again to 17.2%, cementing its place as the second-most shorted share on the local market. Short sellers appear to doubt that Domino's will hit its full-year guidance.
- JB Hi-Fi Limited (ASX: JBH) has 16% of its shares held short, up slightly from last week. Short sellers may be targeting the retailer due to concerns over the threat of online competition and Amazon in particular.
- Galaxy Resources Limited (ASX: GXY) has 14.3% of its shares held short. Last week Galaxy delivered a strong full-year result. Thanks to increased production and lithium prices, combined with lower production costs, Galaxy delivered full-year EBITDA of $52 million.
- Healthscope Ltd (ASX: HSO) has seen short interest rise to 13.5%. Short sellers continue to target the private hospital operator due to concerns that falling private health insurance numbers is negatively impacting its business.
- Independence Group NL (ASX: IGO) has short interest of 12.2%, down sharply for a second week in a row. Some short sellers may be admitting defeat on this one and closing positions. Independence's shares are now up 30% over the last 12 months.
- Vocus Group Ltd (ASX: VOC) has short interest of 11.4%. Investor sentiment in the telco industry continues to remain negative amid concerns about increased competition and lower NBN margins.
- Mayne Pharma Group Ltd (ASX: MYX) has returned to the top ten with short interest of 10.9%. The pharmaceutical company has been suffering greatly from weak prices in the U.S. generic drugs market.
- Retail Food Group Limited (ASX: RFG) has short interest of 10.6%. The food and beverage company continues to be targeted by short sellers despite its sizeable decline this year.
- HT&E Ltd (ASX: HT1) has 10.5% of its shares held short. Short interest has been falling quickly since the outdoor advertising company released a better than expected half-year result last month.