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.
This is because I believe it is well worth keeping a close eye on short interest levels as high levels can be a sign that something isn’t quite right.
Here are the 10 most shorted shares on the ASX this week:
- JB Hi-Fi Limited (ASX: JBH) is the most shorted share on the ASX with 20% of its shares held short. A slowing housing market and the arrival of Amazon appear to be the reason for the high level of short interest.
- Orocobre Limited (ASX: ORE) has short interest of 17%. Concerns over lithium prices and the recent introduction of an export tariff by the Argentine government have weighed heavily on Orocobre’s shares.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest rise week-on-week to 16.1%. Earlier this month Syrah reported yet another production guidance downgrade after issues at its Balama project.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest decline notably week-on-week to 16.1%. Although concerns that lithium prices will sink in the coming years as supply increases have not gone away, some traders may feel that Galaxy’s shares have now priced in lower lithium prices.
- Inghams Group Ltd (ASX: ING) has 13.1% of its shares held short this week. Investors appear concerned that the poultry producer’s margins could come under pressure this year from rising input costs following the droughts.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest fall again. The pizza chain operator now has 12.4% of its shares held short. With investor sentiment turning more and more positive, I suspect short sellers may feel Domino’s is over the worst of its issues now.
- Metcash Limited (ASX: MTS) has 12.2% of its shares held short. The loss of a major supply contract this year has weighed heavily on it shares.
- BWX Ltd (ASX: BWX) has seen short interest rise strongly to 11.2%. The personal care company’s shares have come under pressure since its takeover approach was withdrawn.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat at 11% once again. Short interest has been on the decline over the last few weeks following the release of its results and bold turnaround plans.
- Greencross Limited (ASX: GXL) has short interest of 10.5%, up slightly since last week. Softer trading conditions and concerns over its in-store veterinary clinic rollout are likely to be behind the rising 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 BWX Limited and 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.