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…
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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:
- Syrah Resources Ltd (ASX: SYR) remains the most shorted share in the ASX for another week with short interest rising to 20.6%. The graphite miner recently downgraded its full-year production guidance and advised that it had sold only 72% of its produce during the last quarter.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest slide to 18.4%. Short sellers appear to have closed positions following the release of the retailer’s full-year results last week.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest rise again to 17.5%. This morning the lithium miner released an increase in mineral resource for its Mt Cattlin operation. This may give short sellers something to think about.
- Orocobre Limited (ASX: ORE) has short interest of 15.8%, up week-on-week once again. Short interest in lithium miners such as Orocobre and Galaxy continues to rise due to concerns over future lithium prices.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest fall slightly week-on-week to 14.9%. Although the pizza chain operator released a soft result last week, its shares have rallied notably higher since. Short sellers may start closing positions in a hurry.
- Inghams Group Ltd (ASX: ING) has 13.1% of its shares held short, flat week-on-week. Investors may expect the poultry company to come under pressure from higher feed costs caused by the droughts in NSW.
- Metcash Limited (ASX: MTS) has seen its short interest rise slightly to 11.9%. Short interest spiked when the company warned shareholders of the loss of the Drakes SA supply contract in May.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat at 11.5%. Short sellers don’t appear to believe the department store operator’s turnaround plan is going to be a success.
- Vocus Group Ltd (ASX: VOC) has seen its short interest slide to 10.7%. Later this week the telco company is due to release its full-year results and it looks as though short sellers expect a weak result.
- Harvey Norman Holdings Limited (ASX: HVN) has climbed back into the top ten with short interest of 10.3%. Increased competition and a cooling housing market appear to be behind the rise.
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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 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.