Every Monday I like to start the week with a look at ASIC’s short position report to find out which shares are being targeted by short sellers.
I think it is worth keeping a close eye on short interest levels because high levels can sometimes 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) continues to be the most shorted share on the ASX with 19.8% of its shares held short. Much to the disappointment of short sellers, last week JB Hi-Fi released a reasonably upbeat trading update at its AGM.
- Orocobre Limited (ASX: ORE) has short interest of 16.7%, up slightly since last week. As well as being subjected to a new export tax in Argentina, short sellers appear to believe that Orocobre will see its margins narrow from falling lithium prices.
- Galaxy Resources Limited (ASX: GXY) is another lithium miner being targeted by short sellers. It has short interest of 15.9%, down from 16.5% last week. Disappointing production in the last quarter has weighed on sentiment along with concerns over future lithium prices.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest fall to 15.6%. An endless number of issues have disrupted production at its massive graphite project this year leading to several production guidance downgrades.
- Inghams Group Ltd (ASX: ING) has 13.2% of its shares held short, which is flat on last week. Short interest has remained the same despite the poultry company naming a new CEO this month.
- BWX Ltd (ASX: BWX) has seen its short interest edge higher to 12.6%. Although the personal care company’s shares have fallen heavily this year, short sellers appear to believe they can fall further. I suspect there are concerns that recent acquisitions are failing and Sukin’s sales are softening.
- Metcash Limited (ASX: MTS) has 12.4% of its shares held short, down slightly since last week. Short sellers have been targeting the wholesaler due to increasing competition from the likes of Aldi and also the loss of a major supply contract in South Australia.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has continued to see its short interest fall. The pizza chain operator now has just under 12% of its shares held short, which I think could be a sign that short sellers are closing positions in an orderly manner.
- InvoCare Limited (ASX: IVC) now has 11.3% of its shares held short, up from 10.9% last week. I think that short sellers have begun targeting the funeral company due to its low growth prospects and premium valuation.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest reduce slightly to 11.15%. Although short sellers don’t appear confident on Myer’s prospects, insiders seem to be more confident. Several directors have bought shares on-market this month.
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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.