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. Short sellers will borrow shares to sell on market with the aim of buying them back at a lower price in the future and profiting from the difference. It is a high-risk strategy with the potential for unlimited losses, so short sellers will often only take a short position when they believe they have a high probability of success. Because of this I think it is important for investors to keep a close…
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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. Short sellers will borrow shares to sell on market with the aim of buying them back at a lower price in the future and profiting from the difference.
It is a high-risk strategy with the potential for unlimited losses, so short sellers will often only take a short position when they believe they have a high probability of success. Because of this I think it is important for investors to keep a close eye on short interest levels.
Here are the 10 most shorted shares on the ASX this week:
- JB Hi-Fi Limited (ASX: JBH) has become the most shorted share on the Australian share market after its short interest rose to 19.5%. Short sellers appear to have taken an interest in the retailer due to concerns over a cooling housing market, increasing competition, and a weak performance from its Good Guys brand.
- Syrah Resources Ltd (ASX: SYR) is no longer Australia’s most shorted share after short interest fell once again to approximately 19.5%. The graphite miner has seen a sharp reduction in short interest in recent weeks, possibly indicating that some short sellers are moving on.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest fall week-on-week to 14.9%. Opinion remains divided on the pizza chain operator delivering on its full-year earnings guidance next month.
- Galaxy Resources Limited (ASX: GXY) has 14.2% of its shares held short this week, up slightly week-on-week. Concerns over future lithium prices have weighed on investor sentiment.
- Orocobre Limited (ASX: ORE) isn’t far behind its lithium rival with short interest of 13.2%. The lithium miners are likely to be under pressure until there are signs that prices will remain high or even push higher.
- Inghams Group Ltd (ASX: ING) has short interest of 12.4%, up strongly week-on-week. The surprise exit of the poultry company’s CEO after just two and a half years appears to have caught the attention of short sellers.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat at 12.1%. Short sellers appear to be betting that the embattled department store operator’s turnaround plan doesn’t work.
- Metcash Limited (ASX: MTS) has seen its short interest rise strongly week-on-week to 12%. The probable loss of the Drakes SA supply contract and concerns that there may be more to come have put this wholesale distributor’s shares under significant pressure in recent weeks.
- Vocus Group Ltd (ASX: VOC) has seen its short interest slide once again to 11.6%. It looks as though short sellers may believe the telco company’s shares have bottomed now.
- Greencross Limited (ASX: GXL) has short interest of 10.8%, down slightly week-on-week. A weak trading update and concerns over its in-store veterinary clinic rollout have weighed on investor sentiment.
Finally, here are three top growth shares that short sellers would be wise to avoid.
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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.