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) continues to be the most shorted share on the Australian share market with short interest sliding to 16.7%. Short sellers will be regretting this one. Last week Nufarm’s shares rocketed to a 52-week high following the release of its results.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest remain flat at 16.2%. All eyes will be on Syrah in the coming weeks when it announces its production plans. The graphite producer is currently receiving less for its produce than its costs to pull it out of the ground.
- Galaxy Resources Limited (ASX: GXY) has 16.2% of its shares held short, which is up sharply week on week. Last week the lithium miner’s shares hit a 52-week low after lithium prices sank to two-year lows amid soft demand and increasing supply.
- Orocobre Limited (ASX: ORE) has seen its short interest rise slightly week on week to 16.2%. As with Galaxy, a sharp decline in lithium prices has weighed heavily on its shares.
- Inghams Group Ltd (ASX: ING) has seen its short interest remain flat at 14.9%. Short sellers have been targeting the poultry producer due to the negative impact of the droughts on its margins.
- NEXTDC Limited (ASX: NXT) has 14.3% of its shares held short, which is flat week on week. It appears as though rising competition in the data centre industry is partly to blame for the high level of short interest.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest fall to 12.7%. Short sellers may be closing positions due to its strong performance in FY 2019 and positive outlook.
- GWA Group Ltd (ASX: GWA) has short interest of 12%, which is down week on week. This building products company has come to the attention of short sellers after it warned that trading conditions in FY 2020 would be tough.
- HUB24 Ltd (ASX: HUB) has short interest of 11%, which is down week on week once again. Short sellers may be targeting the company amid concerns over the impact of low interest rates on its business model.
- Bingo Industries Ltd (ASX: BIN) has entered the top ten with short interest of 10.3%. A particularly weak performance in FY 2019 appears to have caught the eye of short sellers.
Instead of those highly shorted shares, I would buy these buy-rated stocks which has been tipped for very big things.
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James Mickleboro owns shares of Galaxy Resources Limited and NEXTDC Limited. 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.