At the start of each week I like to take a look at ASIC’s short position report to find out which shares have been targeted by short sellers.
The reason for this is that I think it is worth keeping an eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right.
With that in mind, 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 17.3% of its shares held short. Last week the retailer’s shares sank to a 52-week low amid concerns that its Christmas trading wasn’t as strong as hoped.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest hold firm at 17%. The lithium miner has been targeted by short sellers due to fears that lithium prices will sink lower on the back of increasing supply and lower demand.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest fall meaningfully week on week to 16.4%. As with lithium, there is speculation that graphite prices may not be as strong as hoped due to increasing supply and weaker demand.
- Inghams Group Ltd (ASX: ING) has 13.2% of its shares held short, which is down slightly week-on-week. Short sellers are betting on the poultry producer being negatively impacted by rising input costs from the droughts.
- Metcash Limited (ASX: MTS) has 13.1% of its shares in the hands of short sellers, which is flat on last week’s numbers. The wholesale distributor’s shares have come under pressure due to the loss of a major supply contract in South Australia and fears that Aldi is stealing market share away from it.
- Orocobre Limited (ASX: ORE) has short interest of 12.9%, down meaningfully week on week. Orocobre’s shares were sold off late last year after it reported a sharp decline in its lithium carbonate prices during the December quarter. It looks as though some short sellers may have closed positions and locked in their profits after this decline.
- InvoCare Limited (ASX: IVC) has 12.1% of its shares held short, down slightly since last week. Much to the delight of short sellers, the funeral company’s shares sank to a multi-year low last week. Tough trading conditions in the funeral industry are expected to lead to InvoCare posting a disappointing result in FY 2019.
- NEXTDC Ltd (ASX: NXT) has 12% of its shares held short, down slightly week on week. Although NEXTDC is benefiting from the cloud computing boom, short sellers don’t appear to believe the data centre operator is benefiting enough to justify such a nosebleed valuation.
- BWX Ltd (ASX: BWX) has seen its short interest fall again to 11.9%. The company behind the Sukin brand saw its share price get smashed last month after a surprise downgrade to its earnings guidance for FY 2019.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest slide to 11.6%. There are concerns that Myer may have had a disappointing Christmas trading period.
Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited and NEXTDC Limited. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool Australia has recommended 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.