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 Australian share market with 19.4% of its shares held short. This was a big week on week jump and appears to be an indication that short sellers are expecting a weak full year result and/or guidance from the poultry producer this month.
- Nufarm Limited (ASX: NUF) has dropped from the top spot even after recording a strong rise in short interest to 18.7%. Short sellers have been targeting the embattled agricultural chemical company due to the droughts and concerns over potential repercussions from its sales of glyphosate.
- Bellamy’s Australia Ltd (ASX: BAL) has seen its short interest slide week on week to 16.1%. Delays to the SAMR accreditation required to sell its key infant formula products in China have weighed on its shares. I suspect short sellers believe Bellamy’s could disappoint with its FY 2020 guidance this month.
- Galaxy Resources Limited (ASX: GXY) has 16% of its shares held short, which is up again week on week. Galaxy’s shares rose strongly last week after lithium giant Albemarle upgraded its full year guidance and advised that it expect lithium prices to rise in the near term.
- Orocobre Limited (ASX: ORE) has seen its short interest increase slightly to 15.7%. Short sellers have been targeting Orocobre and Galaxy due to weakening lithium prices over the last 12 months. However, if prices have reached an inflection point, I wouldn’t be surprised to see their short interest slide over the coming weeks.
- JB Hi-Fi Limited (ASX: JBH) has experienced a rise in short interest to 14.2%. Later this morning the retailer will release its full year results. Some short sellers appear confident that it will disappoint.
- NEXTDC Limited (ASX: NXT) has 13.7% of its shares held short, which is up week on week. Short sellers may be targeting NEXTDC due to increasing competition and the sky high multiples its shares trade on.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest rise slightly to 13.4%. Some short sellers may believe the graphite producer isn’t over the worst of its issues just yet.
- BWX Ltd (ASX: BWX) has 12.1% of its shares held short, which is flat week on week once again. The personal care products company has been on the radar of short sellers this year due to the deterioration of the sales performance of its key Sukin brand.
- Pilbara Minerals Ltd (ASX: PLS) has 11.9% of its shares held short, which is flat on last week’s numbers. Pilbara Minerals is another lithium miner which has been hit hard by falling lithium prices and a weakening outlook for the battery making ingredient.
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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.