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.
This is because I believe it is worth keeping a close eye on short interest levels as high levels can sometimes be an indication 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:
- Galaxy Resources Limited (ASX: GXY) remains the most shorted share on the ASX with short interest of 17.4%, which is up slightly week on week. Short sellers have been targeting Galaxy and its lithium peers due to weakening prices in China.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest rise to 16.9%. Syrah has been one of the most shorted shares on the ASX for a considerable amount of time due to softening graphite prices and a number of production disruptions.
- NEXTDC Limited (ASX: NXT) has short interest of 15.1%, which is up notably week on week once again. Short sellers may believe the data centre operator is going to fail to deliver sufficient growth in FY 2019 to justify its sky-high valuation.
- Nufarm Limited (ASX: NUF) has short interest of 14.2%, which is down slightly week on week. A disappointing half year result from the crop protection and specialist seed company last month is largely behind the high level of short interest.
- Bellamy's Australia Ltd (ASX: BAL) has short interest of 11.7%, which is flat on last week. Short sellers will have been disappointed to see the infant formula company's shares rocket higher last week after a positive announcement.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest drop significantly to 11.7%. Despite the high level of short interest and the housing market downturn, JB Hi-Fi's shares raced to a 52-week high last week.
- Metcash Limited (ASX: MTS) has 11.7% of its shares held short, which is flat week on week. Short sellers may have targeted Metcash due to increasing competition from German supermarket giants Aldi, Lidl, and Kaufland and the loss of a major supply contract.
- Orocobre Limited (ASX: ORE) has short interest of 11.5%, which is flat week on week. The lithium miner has come under pressure due to the sustained softening of lithium prices.
- BWX Ltd (ASX: BWX) has seen its short interest slide to 10.7%. The poor performance of its key Sukin skincare brand is largely the reason why short sellers have their eyes on the company.
- Speedcast International Ltd (ASX: SDA) has entered the top ten with short interest of 10.6%. Earlier this month analysts at Macquarie downgraded its shares to an underperform rating and trimmed the price target on them to $2.85 due partly to concerns over the stability of its dividend.
