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:
- Nufarm Limited (ASX: NUF) is now the most shorted share on the ASX after experiencing a rebound in its short interest to 17%. Short sellers have targeted the embattled agricultural chemical company due to the droughts and concerns over its sales of glyphosate.
- Bellamy's Australia Ltd (ASX: BAL) has seen its short interest rise week on week to 16.8%. Investors appear concerned that the infant formula company could disappoint with its FY 2020 guidance later this month.
- Inghams Group Ltd (ASX: ING) has short interest of 16.7%, which is flat week on week. Short sellers seem to believe that rising input costs from the droughts will weigh on the poultry producer's margins and reduce its profitability.
- Galaxy Resources Limited (ASX: GXY) has 15.5% of its shares held short, which is up again week on week. Galaxy's shares have been sold off this year due to weak lithium prices and a subdued outlook for the battery making ingredient.
- Orocobre Limited (ASX: ORE) has seen its short interest ease slightly to 15.4%. As with Galaxy, investors are becoming increasing bearish on the lithium industry due to supply continuing to outstrip demand. This has put significant pressure on prices.
- JB Hi-Fi Limited (ASX: JBH) has experienced a rise in short interest to 14%. Despite the high level of short interest, JB Hi-Fi's shares have been on fire this year due to improving consumer sentiment from tax cuts and the potential housing market rebound.
- NEXTDC Limited (ASX: NXT) has 13.1% of its shares held short, which is down slightly week on week. Later this month the data centre operator will release its full year results. Given the sky high multiples its shares trade on, NEXTDC will need a strong result to satisfy the market.
- Syrah Resources Ltd (ASX: SYR) has continued to see its short interest slide, this time down to 13.1%. After dropping to a multi-year low last month, short sellers may believe the graphite producer's shares have bottomed at long last.
- BWX Ltd (ASX: BWX) has 12.1% of its shares held short, which is flat week on week. The personal care products company has come under pressure this year due to concerns over the weak sales of its key Sukin brand.
- Pilbara Minerals Ltd (ASX: PLS) remains in the top ten with 11.9% of its shares held short. As with both Galaxy and Orocobre, this lithium miner has been hit hard by falling lithium prices and a weakening outlook for the white metal.
