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.
Instead of those highly shorted shares, I would buy these buy-rated stocks which have been tipped to push higher.
Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.
Stock #1 is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Stock #2 is another high-growth business trading near a 52-week low all while offering a 4.7% grossed-up yield...
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.