Investors should be in an upbeat mood given that the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index is trading around an 11-year high, but spare a thought for short-sellers as several in this group may have found themselves on the wrong side of the market.
This is particularly so for short-sellers who jumped onto the bandwagon to target stocks that have seen a sharp increase in short-interest over the past month.
Short-sellers are those who borrow stock to sell on-market in the hope of buying it back at a lower price later. They tend to be short-term traders who profit from falling share prices.
Notwithstanding the soggy end to the holiday-shortened week with the ASX 200 dipping 0.1% in after lunch trade, market sentiment is bullish and that makes this a difficult time to be a short-seller.
Most targeted by short-sellers
This hasn’t stopped the bearish traders from stepping up their attack on a handful of ASX stocks though with the Nextdc Ltd (ASX: NXT) share price taking the brunt of the onslaught.
Short-interest (the percentage of shares loaned out to short-sellers) in the cloud computing company jumped the most this month of all ASX-listed companies with the latest ASIC data showing a 1.9% increase in short positions to 14.9% for the month to 16 April. ASIC data is always a week behind.
There have been questions about demand keeping up with supply as NextDC launches new datacentres, but investors don’t seem too flustered with the stock gaining 2.5% over the month to $6.46.
Biggest pain for shorts
But the gain in NextDC’s share price is nothing compared to the Kogan.com Ltd (ASX: KGN) share price rally with the stock surging 62% over the past month thanks to an upbeat trading update.
Short-sellers must have been caught off guard given that the online shopping site is the second most targeted stock over the period with short-interest increasing 1.4% to 9.4% of all Kogan stock short sold.
The third most popular stock among short sellers for April is the Navitas Limited (ASX: NVT) share price. The percentage of its shares loaned out to short sellers increased by nearly 1.4% to 2.7% despite the fact that the education services company is about to be acquired.
The Foreign Investment Review Board (FIRB) gave the BGH Consortium the green light to proceed with the takeover of Navitas two weeks ago.
On the flipside, stocks that saw the biggest drop in short-interest over the month include poultry company Inghams Group Ltd (ASX: ING), gold miner Silver Lake Resources Limited. (ASX: SLR) and electronics retailer JB Hi-Fi Limited (ASX: JBH).
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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Kogan.com ltd. 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.