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 it is worth remembering that short sellers don’t always get it right, there have been a number of high profile success stories over the last 12 months that I believe demonstrate why it is worth keeping an eye on short interest levels.
These are the 10 most shorted shares on the ASX this week:
- Syrah Resources Ltd (ASX: SYR) is still the most shorted share on the Australian share market with short interest of 21%. Short sellers have been targeting the graphite miner due to concerns that production at its massive Balama project will lead to an oversupply of the battery making ingredient.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest slide to 19.2%. Short sellers may be closing positions after the retailer’s shares stormed higher over the last few weeks.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest fall slightly to 18.3%. The lithium miner has been targeted by short sellers due to concerns that the potential oversupply of the white metal could lead to a sharp drop in prices and profits.
- Orocobre Limited (ASX: ORE) has seen its short interest rise week-on-week to 15.8%. Last week the lithium miner was hit with export tariffs by the Argentine government.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest fall again, this time to 14.3%. I suspect that short sellers may feel the pizza chain operator is over the worst of it now and could be closing positions.
- Metcash Limited (ASX: MTS) has seen its short interest slide to 12.6%. The wholesale distributor’s shares rose strongly after its AGM last month. 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, flat on last week. The market appears to believe the poultry company will see its input costs rise notably higher due to the increase in feed costs caused by the droughts in NSW.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest slide lower to 11.3%. Later this week the department store operator will release its full year results. The fall in short interest could be a sign that some short sellers expect an improved performance from Myer.
- Greencross Limited (ASX: GXL) has entered the top ten with short interest of 10.5%. There are concerns that the integrated pet care company’s in-store veterinary rollout strategy isn’t working as well as expected.
- G8 Education Ltd (ASX: GEM) has also entered the top ten this week with short interest of 10.5%. The childcare centre operator recently released its half year results which revealed surprisingly low occupancy levels. I don’t expect this to improve in the near term due to the oversupply of centres, making it one 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. 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.