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 remembering 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 amiss.
These are the 10 most shorted shares on the ASX this week:
- Syrah Resources Ltd (ASX: SYR) has continued its run as being Australia’s most shorted share with short interest of 20%. Last week the graphite miner’s shares fell to a 52-week low after it raised $94 million at a significant discount to the then share price. Short sellers appear to believe its shares can still go lower.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise slightly to 19.4%. Concerns over a cooling housing market and Amazon’s growing presence in Australia are likely to be behind the high level of short interest.
- Orocobre Limited (ASX: ORE) has leapfrogged its lithium peer and climbed into third position with a sharp increase in short interest to 16.8%. Earlier this month the lithium miner was hit with export tariffs by the Argentine government.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest fall significantly to 16.5%. Traders may believe that the lithium miner’s shares have bottomed now.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest fall once again, this time to 14%. I think this could be a sign that short sellers believe the pizza chain operator is over the worst of its problems now.
- Inghams Group Ltd (ASX: ING) has 12.5% of its shares held short, up slightly on last week. Many feel the poultry company’s profits could be squeezed from higher input costs due to the increase in feed costs caused by the NSW droughts.
- Metcash Limited (ASX: MTS) has seen its short interest slide meaningfully week-on-week to 11.5%. Investors seem a lot more confident on the wholesale distributor’s outlook after a reasonably positive AGM at the end of last month.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat at 11.3%. Last week the department store operator’s shares rocketed higher despite the release of a soft full year result. It appears some investors were expecting worse.
- Greencross Limited (ASX: GXL) has seen its short interest rise to 11.3%. A disappointing full year result and concerns over its in-store veterinary rollout strategy may be behind the rising short interest.
- Harvey Norman Holdings Limited (ASX: HVN) has re-entered the top ten with short interest of 11%. Like JB Hi-FI, short sellers appear to be targeting the retailer due to Amazon and a cooling housing market. One person that isn’t concerned is Gerry Harvey. He has been buying a significant number of shares through on-market trades during the last week or two.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
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.