Once a 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:
- Syrah Resources Ltd (ASX: SYR) continues to be the most shorted share on the ASX after its short interest rose to 17.75%. Last month the graphite producer revealed that it will slash its production significantly in FY 2020 due to a crash in prices from oversupply.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest slide to 16.6%. As with Syrah, this lithium miner plans to cut its production materially in response to falling prices of the battery making ingredient.
- Orocobre Limited (ASX: ORE) has seen its short interest slide week on week again to 14.3%. Orocobre is one of many battery-ingredient producers that short sellers are targeting due to falling lithium prices. Though, last week they rose strongly after protesters blocked access to lithium operations in Chile.
- Inghams Group Ltd (ASX: ING) has short interest of 13.8%, which is down week on week. Concerns that feed costs could increase materially and weigh on its profits is largely behind this high level of short interest.
- NEXTDC Limited (ASX: NXT) has 13.2% of its shares held short, which is down week on week. Last week the data centre operator held its annual general meeting and reaffirmed its guidance for EBITDA growth of 17% to 23% in FY 2020. Some short sellers don’t appear to believe that this growth justifies the premium its shares trade on.
- GWA Group Ltd (ASX: GWA) has short interest of 13%, which is up week on week. Last month the building products company held its AGM and continued to warn that trading conditions would be tough in FY 2020.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest edge higher to 12.3%. Short sellers continue to target the retailer despite its shares racing to an all-time high last month following a solid sales update.
- Bank of Queensland Limited (ASX: BOQ) has short interest of 12.1%, which is up week on week. Short interest has jumped following the regional bank’s disappointing full year result. Management also warned that FY 2020 would be just as tough, with another decline in earnings forecast.
- Speedcast International Ltd (ASX: SDA) is back in the top ten with short interest of 11%. Another disappointing performance in FY 2019 and a challenging outlook are largely to blame for this high level of short interest.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) has seen its short interest rise slightly to 10.6%. The pizza chain operator has experienced a spike in short interest since its U.S. parent released a disappointing quarterly update.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited. 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.