At the start of each week I look at ASIC’s short position report in order 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 a sign that something isn’t quite right with a company.
With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:
- Syrah Resources Ltd (ASX: SYR) is once again the most shorted share on the ASX despite a reasonable drop in its short interest to 18.3%. The graphite producer has come under pressure over the last 18 months due to a combination poor production, weakening prices, and a bleak outlook.
- Nufarm Limited (ASX: NUF) has seen its short interest slide week on week to 17%. Short sellers may have begun closing positions amid speculation that the struggling agricultural chemical company could be a takeover target.
- Inghams Group Ltd (ASX: ING) has seen its short interest remain flat at 16.9% once again. Short sellers have been targeting the poultry company due to concerns that the droughts have led to notably higher input costs.
- NEXTDC Limited (ASX: NXT) has 14.6% of its shares held short, which is up slightly since last week. Short sellers may believe that the data centre market is getting crowded and could threaten NEXTDC’s growth over the coming years.
- Orocobre Limited (ASX: ORE) has seen its short interest increase reasonably strongly to 14.5%. The lithium miner continues to be targeted due to the collapse in lithium prices caused by softening demand and increasing supply.
- Bellamy’s Australia Ltd (ASX: BAL) has seen its short interest increase again to 14.3%. The infant formula company has been targeted by short sellers due to the delays it is facing in respect to its application for SAMR accreditation. I suspect short sellers are betting on Bellamy’s not being granted it in time for FY 2020.
- Galaxy Resources Limited (ASX: GXY) has short interest of 13.9%, which is flat week on week. As with Orocobre, Galaxy has been targeted due to weak lithium prices and a subdued outlook for the white metal. Things are so bleak that one broker believes that some lithium miners could go out of business.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest ease significantly to 13.2%. Short sellers may believe the retailer is going to benefit from tax cuts and an improving housing market and have been closing positions.
- BWX Ltd (ASX: BWX) has seen its short interest slide to 12.5%. Short sellers remain bearish on BWX due to the struggles the personal care products company is having with its key Sukin brand.
- Bingo Industries Ltd (ASX: BIN) has seen its short interest drop to 11.2%. Some short sellers may be closing positions due to the improving outlook for the housing market.
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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 Bellamy's Australia. 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.