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 according to ASIC:
- Inghams Group Ltd (ASX: ING) continues to be the most shorted share on the ASX with short interest of 17.8%, which is up week on week once again. Short sellers have been targeting the poultry producer due to concerns over increasing input costs and weaker margins because of the droughts.
- Syrah Resources Ltd (ASX: SYR) has short interest of 17.45%, up slightly week on week. Last week the graphite miner's shares rocketed higher after the release of a stronger than expected first quarter update. I suspect this update may prompt some short sellers to close positions.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest increase materially week on week to 17.2%. A sharp decline in lithium prices following a fall in demand and an increase in supply are largely to blame for the high level of short interest.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest slide week on week to 15.7%. JB Hi-Fi has been targeted due to concerns that the housing market downturn could be negatively impacting its JB Hi-Fi and The Good Guys businesses.
- Nufarm Limited (ASX: NUF) has seen its short interest rise strongly week on week to 14%. Last month the crop protection and seed specialist company released a very disappointing half year update which appears to have caught the eye of short sellers.
- NEXTDC Limited (ASX: NXT) has short interest of 13.1%, which is up week on week. Short sellers may be targeting the data centre operator's shares due to their premium valuation.
- Metcash Limited (ASX: MTS) has 12.2% of its shares in the hands of short sellers, which is up week on week. The loss of a major supply contract and increasing competition in the supermarket industry from Aldi and Lidl could be behind the high level of short interest.
- Orocobre Limited (ASX: ORE) has short interest of 12%, which is flat week on week. This lithium miner has come under pressure since the price of the battery making ingredient crashed lower.
- BWX Ltd (ASX: BWX) has seen its short interest ease to 11.3%. A sudden slowdown in the sales of its key Sukin skincare range looks to have caught the eye of short sellers.
- Bellamy's Australia Ltd (ASX: BAL) has short interest of 11%, up slightly week on week. The infant formula company's shares have rallied significantly higher this year and some short sellers may feel they have run too hard.
This week I thought I would also look at the shares on the cusp of entering the top ten.
Just outside the top ten are Speedcast International Ltd (ASX: SDA) with short interest of 10.9%, Super Retail Group Ltd (ASX: SUL) with 9.8% of its shares held short, InvoCare Limited (ASX: IVC) with short interest of 9.7%, and Perpetual Limited (ASX: PPT) with 9.6% of its shares held short.
