Once a week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.
Whilst it is worth noting that short sellers don’t always get it right, I believe it is well worth keeping a close eye on short interest levels as high levels can be a sign that something is not quite right.
These are the 10 most shorted shares on the ASX this week:
- Syrah Resources Ltd (ASX: SYR) continues to be the most shorted share on the ASX with short interest of 20.6%. There are concerns that the company’s Balama project could lead to an oversupply of graphite. The fact that in the last quarter Syrah could only shift 72% of its produce has done nothing to ease these concerns.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise to 19.5%. This increase in short interest hasn’t stopped the retailer’s shares from storming 16% higher over the last 30 days.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest rise once again to 18.4%. Galaxy continues to be targeted by short sellers despite the lithium miner recently finalising an agreement to sell tenements to South Korean conglomerate POSCO for US$280 million.
- Orocobre Limited (ASX: ORE) has seen its short interest slide slightly week-on-week to 15.6%. Like Galaxy, Orocobre is being targeted due to concerns over future lithium prices. There are fears that oversupply will lead to a collapse in prices in the near future.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest fall week-on-week to 14.7%. Short sellers may be giving up on this one now after investor sentiment started to shift positively.
- Metcash Limited (ASX: MTS) has seen its short interest rise slightly to 12.9%. However, the wholesale distributor’s shares surged higher last week after its AGM. Possibly due to short sellers closing positions after the company provided a reasonably positive outlook.
- Inghams Group Ltd (ASX: ING) has 12.3% of its shares held short, down week-on-week once again. Investors appear to expect the poultry company’s performance to be impacted by higher feed costs caused by the droughts in NSW.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest rise slightly to 11.7%. Investors still don’t seem too confident in the department store operator’s turnaround plans.
- Independence Group NL (ASX: IGO) has entered the top ten with short interest of 10%. Weakening gold and nickel prices may be the reason for the sudden rise in short interest.
- Harvey Norman Holdings Limited (ASX: HVN) has short interest of 9.9%, down from a week earlier. Last week the retailer posted a soft full year result which led to its shares drifting lower.
Finally, here are three top shares with low levels of short interest. Short sellers are staying clear of these companies due to their stellar growth prospects.
We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.
That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.
We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!
Motley Fool contributor James Mickleboro owns shares of Galaxy Resources 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.