These are the 10 most shorted shares on the ASX

At the start of each week I like to look at which shares are being targeted by short sellers.

As short selling can be one of the riskiest investment strategies out there, short sellers will generally only take out a position when they have a high conviction of success. Because of this, I believe it is prudent for investors to keep a close eye on what short sellers are doing.

Here are the 10 most shorted shares on the ASX according to data provided by ASIC:

  • Syrah Resources Ltd (ASX: SYR) has continued its run as the most shorted share on the Australian share market with short interest of 21.85%. Short sellers may be targeting the graphite miner due to concerns that its massive Balama project will lead to an oversupply of the metal.
  • Domino’s Pizza Enterprises Ltd. (ASX: DMP) has seen another week-on-week reduction in short interest to 16.25%. I suspect that a couple of favourable broker notes released this month could have led to some short sellers closing positions.
  • JB Hi-Fi Limited (ASX: JBH) has seen its short interest fall week-on-week to 16.1%. A cooling housing market and increased online competition appear to be behind the high level of short interest.
  • Galaxy Resources Limited (ASX: GXY) has 15.3% of its shares held short, up slightly week-on-week. Galaxy and its lithium miner peers have been targeted due to concerns over the future prices of the battery making ingredient. Some analysts believe increased supply in Australia and Argentina will cause prices to halve in the next few years.
  • Healthscope Ltd (ASX: HSO) has seen short interest fall to 13.4%. Rumours that the private hospital operator could be a takeover target appears to have scared off some short sellers.
  • Vocus Group Ltd (ASX: VOC) has experienced yet another week-on-week rise in short interest to 12.4%. Weaker than expected NBN margins and increased competition appear to be behind the negative investor sentiment.
  • Nanosonics Ltd (ASX: NAN) has seen its short interest fall to 11.1%. Some short sellers may have closed positions after it emerged that insiders were buying the infection control specialist’s shares.
  • HT&E Ltd (ASX: HT1) is back in the top ten with short interest of 11%. Short sellers may have got this one wrong unfortunately. HT&E’s shares have rallied strongly recently after it rejected a bid by oOh!Media Ltd (ASX: OML) for its street furniture advertising brand Adshel.
  • Orocobre Limited (ASX: ORE) has entered the top ten with short interest of 10.9%. As well as concerns over lithium prices, unfavourable weather conditions have impacted Orocobre’s production in FY 2018.
  • Independence Group NL (ASX: IGO) has short interest of 10.9%. The gold and nickel miner has seen its short interest fall notably lower in recent months amid improved nickel prices and investor sentiment.

Finally, forget Syrah or JB Hi-Fi, here are three top shares with low short interest levels that I would buy today.

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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 Nanosonics 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 Scott Phillips.

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