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. This is because I believe it is 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) remains the most shorted share on the ASX with 20% of its shares held short. Investors appear concerned that the weak housing market, online competition, and soft consumer spending could have a negative impact on the retailer’s performance.
- Orocobre Limited (ASX: ORE) has short interest of 16.6%, down slightly since last week. Short sellers are betting on lithium supply increasing in the coming years and putting significant pressure on prices.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest rebound week-on-week to 16.5%. As well as lithium price concerns, last week’s disappointing production update hasn’t helped with investor sentiment.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest remain flat at 16.1%. Disappointing production disruptions recently led to a guidance downgrade and sent its shares to a 52-week low.
- Inghams Group Ltd (ASX: ING) has 13.2% of its shares held short, up slightly from last week. The poultry company held its AGM and named a new CEO last week. Shareholders will be hopeful that the new CEO can improve its performance.
- Metcash Limited (ASX: MTS) has 12.5% of its shares held short. Short sellers continue to target the wholesaler due to increasing competition and the loss of a major supply contract.
- BWX Ltd (ASX: BWX) has seen its short interest rise strongly again to 12.5%. The personal care company’s shares have fallen heavily since its takeover approach was withdrawn. Short sellers don’t seem to think that they have bottomed yet and may believe that recent acquisitions are failing.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest fall again. The pizza chain operator now has 12.1% of its shares held short. Short sellers appear to be making an orderly exit from this one.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest rise slightly to 11.2%. News that U.S. department store chain Sears has gone into administration won’t have helped investor sentiment last week.
- InvoCare Limited (ASX: IVC) has returned to the top ten with 10.9% of its shares held short. Short sellers may be targeting the funeral company due to its low growth prospects and premium valuation.
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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. 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.