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) continues to be most shorted share on the ASX after its short interest rose to 19.1%. Short sellers have targeted the graphite producer this year due to a combination of poor production, weakening prices, and a bleak outlook.
- Nufarm Limited (ASX: NUF) has seen its short interest rise week on week to 17.4%. Short sellers have increased their positions despite speculation that the struggling agricultural chemical company could be a takeover target.
- Inghams Group Ltd (ASX: ING) has seen its short interest drop materially week on week to 15.9%. The poultry company has come onto the radar of short sellers due to concerns that the droughts have led to higher input costs and impacted its margins.
- Bellamy’s Australia Ltd (ASX: BAL) has seen its short interest increase strongly again to 15.1%. It appears as though short sellers are betting that the infant formula company doesn’t receive its SAMR accreditation in time for FY 2020. This could mean another 12 months with minimal earnings growth.
- Orocobre Limited (ASX: ORE) has seen its short interest increase to 14.7%. A collapse in lithium prices caused by softening demand and increasing supply has weighed heavily on Orocobre’s shares over the last 12 months.
- NEXTDC Limited (ASX: NXT) has 14.3% of its shares held short, which is down slightly since last week. Short sellers appear concerned that the data centre market is getting crowded and could lessen NEXTDC’s growth potential over the coming years.
- Galaxy Resources Limited (ASX: GXY) has short interest of 14.1%, which is up slightly week on week. Weak lithium prices and a subdued outlook for the white metal have weighed heavily on its shares this year, much to the delight of short sellers.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest ease again to 13.1%. It looks as though short sellers are closing positions due to the prospect of tax cuts and an improving housing market boosting the retailer’s sales.
- BWX Ltd (ASX: BWX) has seen its short interest slide to 12.4%. BWX’s shares are down 60% over the last 12 months due to the underperformance of its Sukin skincare range.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has entered the top ten with short interest of 11%. Short sellers appear to believe the pizza chain operator is going to fall short of its guidance yet again in FY 2019.
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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.