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. As it is a high-risk strategy with the potential for unlimited 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)…
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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.
As it is a high-risk strategy with the potential for unlimited 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) has retained the unwanted honour of being the most shorted share on the Australian share market with 21% of its shares held short. Graphite production and price concerns have weighed heavily on investor sentiment for at least 12 months.
- JB Hi-Fi Limited (ASX: JBH) is closing in fast on Syrah with another increase in short interest. It currently stands at 17.9%, its highest level in recent memory. Short sellers may have their eyes on the retailer due to a housing market slowdown, increased competition in the appliance market, and a surprise underperformance from its Good Guys brand.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest rebound slightly week-on-week to 15.3%. A couple of broker downgrades last week voiced concerns over its Japanese business and the impact it could have on its full-year results.
- Galaxy Resources Limited (ASX: GXY) has 14.5% of its shares held short this week. Lithium miners surged higher late last week after a note out of Goldman Sachs claimed that concerns over a lithium oversupply are unfounded.
- Orocobre Limited (ASX: ORE) has short interest of 12.9%, up slightly week-on-week. Short sellers have been targeting Orocobre and its lithium peers due to concerns over future prices of the battery-making ingredient. But if Goldman Sachs is correct, they may be in danger of making losses on these trades.
- Vocus Group Ltd (ASX: VOC) has seen its short interest remain flat at 12.3%. Investors are becoming increasingly bearish on the telco sector due to heightened competition and narrowing margins.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest remain steady at 12.1%. Short sellers have been targeting the department store operator after its turnaround strategy failed to deliver any meaningful results.
- Australian Agricultural Company Ltd (ASX: AAC) has 11.5% of its shares held short, down slightly week-on-week. The agribusiness company has had a year to forget in FY 2018 and short sellers don’t appear to expect things to improve any time soon.
- Metcash Limited (ASX: MTS) has entered the top ten this week with a sharp rise in short interest to 11.3%. The potential loss of the Drakes SA supply contract has hit the company and investor sentiment hard.
- Greencross Limited (ASX: GXL) has seen its short interest rise slightly to 11.1%. Concerns over its in-store veterinary clinic roll out strategy recently led to Deutsche Bank slapping a sell rating and $3.70 price target on its shares.
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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 and Vocus Communications Limited. The Motley Fool Australia has recommended Domino's Pizza Enterprises 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.