Every Monday I like to start the week with a look at ASIC's short position report to find out which shares are being targeted by short sellers. A short seller borrows shares to sell on market with the aim of buying them back at a lower price in the future and pocketing the difference.
As it is a high-risk strategy with the potential for limitless losses, short sellers will often only take a short position if they believe they have a high probability of success. Because of this I think it is prudent for investors to keep a close eye on short interest levels.
According to data provided by ASIC, here are the 10 most shorted shares on the ASX this week:
- Syrah Resources Ltd (ASX: SYR) is yet again the most shorted share on the Australian share market with short interest of 21.8%. The graphite miner has been targeted due to concerns over the prices it is commanding for its produce.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has seen a week-on-week increase in short interest to 17.2%. But on Friday the pizza chain operator's shares surged higher after the release of positive sales data out of its U.S. equivalent.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise week-on-week to 16.2%. Concerns over a cooling housing market and increased online competition are likely to be behind the high level of short interest.
- Galaxy Resources Limited (ASX: GXY) has 15.2% of its shares held short, up slightly week-on-week. Galaxy recently released its latest update which revealed surprisingly weak production results.
- Healthscope Ltd (ASX: HSO) has seen short interest fall to 13.2%. News that the private hospital operator is a takeover target will have been a big blow to short sellers.
- Nanosonics Ltd (ASX: NAN) has seen its short interest rise sharply to 12.7%. Short sellers may be regretting this one as well. The infection control specialist's shares rocketed higher last week when it announced FDA clearance for its new trophon2 device.
- Vocus Group Ltd (ASX: VOC) has seen short interest remain flat at 12.4%. Weaker than expected NBN margins and increased competition appear to be behind the negative investor sentiment.
- Retail Food Group Limited (ASX: RFG) has returned to the top ten with 11.2% of its shares held short. Short sellers appear to believe the embattled food and beverage company's shares can go even lower.
- Myer Holdings Ltd (ASX: MYR) has also returned to the top ten this week with short interest rising to 11.2%. The department store operator recently announced its new CEO, but short sellers don't appear to believe he will be able to turn the ship around.
- Orocobre Limited (ASX: ORE) has seen short interest rise slightly to 11%. Short sellers have been capitalising on unfavourable weather conditions which have impacted Orocobre's production in FY 2018.
