Every Monday 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:
- Syrah Resources Ltd (ASX: SYR) has returned to the top spot with short interest flat at 16.7%. The graphite miner’s shares have been hammered over the last couple of weeks after a trading update revealed lower than expected prices and higher than anticipated costs for FY 2019.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest decline notably to 16.5%. Short sellers may have closed positions and taken profit after Galaxy’s shares crashed lower following its disappointing quarterly update.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest fall again, this time to 15.1%. Short sellers may have been closing positions ahead of its half year results release this morning. JB Hi-Fi is expected to have struggled due to the housing market weakness.
- Inghams Group Ltd (ASX: ING) has 14.8% of its shares held short, which is down meaningfully week on week. Last week the poultry producer’s shares hit an all-time high, much to the dismay of short sellers.
- InvoCare Limited (ASX: IVC) has 13.4% of its shares held short, up week on week once again. Short sellers appear to be targeting the funerals company due to its weak outlook for FY 2019.
- Orocobre Limited (ASX: ORE) has short interest of 13.4%, down 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 battery making ingredient.
- Metcash Limited (ASX: MTS) has 12.8% of its shares in the hands of short sellers, which is down slightly week on week. Concerns over increasing competition and the loss of a major supply contract to Drakes South Australia appear to be the reason for the high level of short interest.
- BWX Ltd (ASX: BWX) has short interest of 12%, up slightly week on week. The personal care products company’s shares have come under fire after its sizeable profit downgrade late last year. The market appears concerned that this won’t be a quick fix.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest rise slightly to 11.7%. Judging by its short interest levels, short sellers don’t appear confident that the Myer business can be successfully turned around.
- NEXTDC Ltd (ASX: NXT) has 11.4% of its shares held short, down meaningfully week on week. Some short sellers may be closing positions ahead of its earnings release. Strong demand for data centre services has some brokers tipping a strong result from NEXTDC this month.
Instead of buying those shares, I think investors should be buying these growth shares which have low levels of short interest
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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.