Every Monday 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:
- Syrah Resources Ltd (ASX: SYR) has become the most shorted share on the ASX after a meaningful week on week rise in short interest to just over 17%. Syrah is likely to have been targeted due to concerns that graphite prices may not be as strong as hoped due to increasing supply and weaker demand.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest hold firm again at 17%. The lithium miner has been targeted by short sellers due to fears that lithium prices will sink lower due to an oversupply of the battery making ingredient.
- JB Hi-Fi Limited (ASX: JBH) is no longer the most shorted share on the ASX after a reasonable decline in short interest to 16.9%. Some short sellers may believe the retailer’s shares have bottomed after recently hitting a 52-week low.
- Inghams Group Ltd (ASX: ING) has 13.8% of its shares held short, which is up meaningfully week-on-week. Concerns that the droughts could lead to rising input costs appear to be behind the high levels of short interest.
- Metcash Limited (ASX: MTS) has 13.5% of its shares in the hands of short sellers, which is an increase on last week’s numbers. The loss of a major supply contract and increasing competition from ALDI is likely to be why short sellers are targeting the wholesale distributor.
- Orocobre Limited (ASX: ORE) has short interest of 13.4%, up week on week. The lithium miner’s shares were sold off late last year after it reported a sharp decline in its lithium carbonate prices during the December quarter.
- InvoCare Limited (ASX: IVC) has 12.8% of its shares held short, up strongly since last week. InvoCare’s financial performance is expected to underwhelm this year due to tough trading conditions in the funeral industry.
- NEXTDC Ltd (ASX: NXT) has 12.4% of its shares held short, up slightly week on week. Short sellers don’t appear to believe the data centre operator is benefiting enough from the cloud computing boom to justify its sky high valuation.
- BWX Ltd (ASX: BWX) has seen its short interest rise slightly to 12%. 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 remain flat at 11.6%. Short sellers appear to believe that Myer may have had a disappointing Christmas trading period and could disappoint again in FY 2019.
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.