At the start of each week I like to look at ASIC’s short position report to find out which shares short sellers are targeting.
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.
Here are the 10 most shorted shares on the ASX this week:
- JB Hi-Fi Limited (ASX: JBH) is now the most shorted share on the Australian share market with short interest of 19.5%. Concerns that its performance could be negatively impacted by a cooling housing market and online competition has hit investor sentiment.
- Syrah Resources Ltd (ASX: SYR) has fallen from the top spot after a significant decline in short interest. The graphite miner now has 17.1% of its shares held short, compared to 20% last week. Short sellers may believe its shares have bottomed after recently hitting a 52-week low.
- Orocobre Limited (ASX: ORE) has seen its short interest rise slightly to 16.9%. Short interest has been on the rise since the lithium miner was hit with export tariffs by the struggling Argentine government.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest remain flat at 16.5%. Galaxy is just one of a number of lithium miners with high levels of short interest. Concerns that increasing supply could weigh on lithium prices has weighed on the industry this year.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has continued to see its short interest fall. The pizza chain operator now has 13.3% of its shares in the hands of short sellers, down from 14% last week. I feel this is a sign that many short sellers believe the pizza chain operator is over the worst of its problems now.
- Inghams Group Ltd (ASX: ING) has 12.1% of its shares held short, down slightly on last week. The poultry company is expected to be negatively impacted by higher input costs due to the increase in feed costs caused by the NSW droughts.
- Metcash Limited (ASX: MTS) has seen its short interest rebound slightly to 11.8%. Short interest had been reducing significantly over recent weeks after its reasonably upbeat AGM at the end of last month.
- Greencross Limited (ASX: GXL) has seen its short interest slide slightly to 11.2%. Last week the integrated pet care company’s shares hit a 52-week low. Investors have been hitting the sell button due to its disappointing full year result and concerns over its in-store veterinary rollout strategy.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest fall slightly to 11.2%. The department store operator’s shares have been on fire this month after investors bet on the company’s latest turnaround plans being a success.
- G8 Education Ltd (ASX: GEM) is back in the top ten with short interest of 10.7%. Short sellers are likely to be targeting G8 Education due to the oversupply of childcare centres and its weakening occupancy levels.
Lastly, if you want to avoid shares that are being targeted by short sellers then check out this top share which has low levels of short interest.
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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.