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:
- Orocobre Limited (ASX: ORE) is now the most shorted share on the Australian share market with short interest of 17%. Concerns over lithium prices and the recent introduction of an export tariff by the Argentine government continue to weigh on Orocobre’s shares.
- Galaxy Resources Limited (ASX: GXY) is another lithium miner that short sellers are targeting. It has 16.5% of its shares held short largely on the back of concerns that lithium prices will sink in the coming years as supply increases.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest decline again week-on-week to 16%. Last week the Syrah share price sank lower after it reported yet another production guidance downgrade.
- JB Hi-Fi Limited (ASX: JBH) has seen a sudden and sharp reduction in its short interest. The retailer now has 15.2% of its shares held short, compared to short interest of 19.6% last week. This is either a data error or a sign that some major short sellers have started to move on.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest fall once again. The pizza chain operator now has 12.7% of its shares held short. I suspect that short sellers believe Domino’s is over the worst of its issues now.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat at 11%. Short interest has fallen sharply since the release of its results last month.
- Greencross Limited (ASX: GXL) is back in the top ten with short interest of 10.4%. The market doesn’t appear convinced that the integrated pet care company’s in-store veterinary clinic rollout is working.
- BWX Ltd (ASX: BWX) has entered the top ten with short interest of 10.15%. The personal care company’s shares have come under pressure since its takeover approach was withdrawn.
- G8 Education Ltd (ASX: GEM) has re-entered the top ten with 9.7% of its shares held short. Surprisingly low occupancy levels due to the oversupply of childcare centres appears to have caught the eye of short sellers.
- InvoCare Limited (ASX: IVC) has climbed into the top ten with short interest of 9.6%. Short sellers appear to be targeting the funerals provider due to its premium valuation and underwhelming short term growth potential.
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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 BWX Limited and Greencross Limited. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited and InvoCare 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.