At the start of each week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.
While short sellers don’t always get it right, there have been a number of high profile success stories over the last 12 months. In light of this, I think it is well worth keeping a close eye on short interest levels.
These are the 10 most shorted shares on the ASX this week:
- Syrah Resources Ltd (ASX: SYR) has continued its long run as being the most shorted share on the Australian share market with 20.8% of its shares held short. Short sellers have been targeting Syrah due to concerns that its Balama project could lead to an oversupply of graphite.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest surge to 17.3%. JB Hi-Fi has been dealt two major blows in recent weeks. One was increased competition in the appliance market and the other was the launch of Amazon Prime in Australia.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has once again seen its short interest slide week-on-week, this time to 15%. Short sellers don’t appear as confident in Domino’s missing its FY 2018 guidance as they once were.
- Galaxy Resources Limited (ASX: GXY) has 14.4% of its shares held short. Short sellers have been closing positions since the lithium miner sold tenements at its Sal de Vida operation to South Korea’s POSCO. This should allow Galaxy to fund the commissioning of Argentina-based operation through its cash reserves.
- Orocobre Limited (ASX: ORE) is another lithium miner which short sellers are targeting. It has short interest of 12.9%, up slightly week-on-week. Short sellers have been targeting lithium miners due to concerns over future prices of the battery-making ingredient.
- Vocus Group Ltd (ASX: VOC) has short interest of 12.3%. Short sellers continue to target Vocus despite the telco company’s shares falling notably lower over the last 12 months.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest fall again, this time to 12.1%. The department store operator’s shares may have fallen enough for some short sellers to lock in their gains.
- Australian Agricultural Company Ltd (ASX: AAC) has seen short interest remain flat at 11.7%. The agribusiness company came onto the radar of short sellers after a disastrous FY 2018.
- Nanosonics Ltd (ASX: NAN) has seen its short interest slide again, this time to 11.4%. This has proven to be one of the worst shorts of FY 2018 in my opinion.
- Greencross Limited (ASX: GXL) has leapfrogged InvoCare Limited (ASX: IVC) to return to the top ten with short interest of 11%. Last month Deutsche Bank slapped a sell rating and $3.70 price target on the integrated pet care company’s shares. It appears concerned that its in-store veterinary clinic roll out isn’t going to be as successful as first hoped.
While those shares may be the ones to avoid, these top shares are certainly the ones to buy if you ask me.
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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 Greencross Limited, Nanosonics Limited, and Vocus Communications Limited. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited and InvoCare 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.