At the start of each week I like to 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:
- Inghams Group Ltd (ASX: ING) has become the most shorted share on the ASX with 16.7% of its shares held short. Short sellers appear confident that the poultry producer will disappoint during earnings season due to the impact of the droughts on its margins.
- Nufarm Limited (ASX: NUF) has seen its short interest slide week on week to 16.5%. Short sellers have been targeting the struggling agricultural chemical company due to a severe deterioration in its financial performance because of the droughts.
- Bellamy’s Australia Ltd (ASX: BAL) has seen its short interest ease slightly week on week to 16.2%. Last week analysts at Morgans tipped the infant formula company as one that could disappoint during earnings season.
- Orocobre Limited (ASX: ORE) has also seen its short interest ease to 15.6%. Short sellers have been shorting the lithium miner due to a collapse in the price of the battery making ingredient. This has been caused by softening demand and increasing supply.
- Galaxy Resources Limited (ASX: GXY) has 15.3% of its shares held short, which is up reasonably strongly week on week. As with Orocobre, Galaxy’s shares have come under pressure again this year due to weak lithium prices and a subdued outlook for the white metal.
- Syrah Resources Ltd (ASX: SYR) is no longer the most shorted share on the local market after its short interest fell materially to 14.6%. Some short sellers may believe the graphite producer’s shares have finally bottomed after a series of heavy share price declines.
- NEXTDC Limited (ASX: NXT) has 13.2% of its shares held short, which is down sharply week on week. Short sellers may be closing positions just in case the data centre operator surprises to the upside during earnings season.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest remain flat at 13%. Much to the dismay of short sellers, the retailer’s shares hit an all-time high on Friday. Investors appear confident that a housing market rebound and tax cuts will boost its performance.
- BWX Ltd (ASX: BWX) has seen its short interest slide week on week again to 12.1%. Some short sellers may believe the personal care products company’s shares have now bottomed and are closing their positions.
- Pilbara Minerals Ltd (ASX: PLS) has entered the top ten after overtaking Domino’s Pizza Enterprises Ltd (ASX: DMP) with 11.8% of its shares held short. This means that there are now three lithium miners in the top 10.
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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.