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.
I do this because 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:
- Galaxy Resources Limited (ASX: GXY) has jumped back to the top of the list after short sellers increased their overall position in the company to 17.1%. Short sellers have returned in their droves after Galaxy's quarterly update last month. That update revealed a significant drop in the price of its lithium and warned that prices have weakened further in 2019.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest fall slightly to 16.7%. Short sellers will have been celebrating last week after a weak update led to Syrah's shares being the worst performers on the ASX 200 with a 28% decline.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest ease slightly to 15.9%. Short sellers appear to believe JB Hi-Fi will deliver a disappointing half year result this month due to weakness in the white goods market due to the housing market slowdown.
- Inghams Group Ltd (ASX: ING) has 15.5% of its shares held short, which is up slightly week on week. Despite the high level of short interest, the poultry producer's shares climbed to an all-time high last week.
- Orocobre Limited (ASX: ORE) has short interest of 13.5%, up slightly week on week. As with Galaxy Resources, short sellers have been targeting this lithium miner due to a sharp decline in the price of the white metal.
- InvoCare Limited (ASX: IVC) has 13.2% of its shares held short, up week on week once again. A premium valuation and weak outlook appear to have attracted short sellers to the funerals company.
- Metcash Limited (ASX: MTS) has 12.9% of its shares in the hands of short sellers, which is down slightly week on week. Short sellers have taken an interest in the wholesaler and distributor due to increasing competition and the loss of a major supply contract to Drakes South Australia.
- NEXTDC Ltd (ASX: NXT) has 12% of its shares held short, down slightly week on week. Some investors appear to believe that the data centre operator's earnings growth won't justify the sky high multiples that its shares trade on at present.
- BWX Ltd (ASX: BWX) has short interest of 11.9%. The personal care products company shocked the market late last year with a sizeable profit downgrade and short sellers appear to believe things will get worse before they get better.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat yet again at 11.6%. All eyes will be on Myer next month when it reveals how its turnaround plans are tracking. Judging by its short interest levels, some don't appear to believe they are going well.
