Every Monday 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) continues to be the most shorted share on the Australian share market with short interest of 17.3%. The agricultural chemicals company has been targeted due to concerns over the droughts and its sales of the glyphosate herbicide.
- Orocobre Limited (ASX: ORE) has seen its short interest remain flat week on week at 16.1%. The lithium miner has been hit hard this year due to weakening lithium prices and a bleak outlook.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest rise to 16%. The graphite miner’s shares crashed lower this month after it downgraded its production materially in response to a significant drop in graphite prices. It currently costs more for Syrah to produce graphite than it receives from buyers.
- Galaxy Resources Limited (ASX: GXY) has 15.6% of its shares held short, which is down notably week on week. Galaxy is another lithium miner which has come under significant pressure this year due to a sustained decline in lithium prices.
- Inghams Group Ltd (ASX: ING) has seen its short interest rise to 14.9%. Short sellers appear to believe the poultry producer could struggle with rising input costs because of the droughts and new contract renewals.
- NEXTDC Limited (ASX: NXT) has 14.6% of its shares held short, which is up slightly week on week. Short sellers may be concerned with rising competition in the data centre market and the high multiples its shares trade on.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise slightly to 13.5%. Whilst the retailer impressed in August, short sellers don’t appear confident that this strong form will continue.
- GWA Group Ltd (ASX: GWA) has short interest of 11.9%, up slightly week on week. In August the building products company warned that weaker consumer sentiment, credit tightening, and falling house prices are expected to weigh on its performance in FY 2020.
- HUB24 Ltd (ASX: HUB) has short interest of 11.3%, which is up sharply week on week. The fintech company appears to have been targeted due to concerns over the impact of low interest rates on its business model.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has re-entered the top ten with 10.1% of its shares held short. The pizza chain operator has replaced Bellamy’s Australia Ltd (ASX: BAL) in the top ten. The infant formula company’s short interest reduced materially the day before it received a takeover approach.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited and Hub24 Ltd. 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.