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:
- Syrah Resources Ltd (ASX: SYR) continues to be the most shorted share on the ASX with short interest flat at 17.75%. The graphite miner has come under pressure in 2019 after prices of the battery making ingredient crashed lower due to oversupply and softening demand. Syrah intends to slash its production significantly in FY 2020.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest fall slightly to 16.2%. As with Syrah, Galaxy has come under pressure after the lithium price sank lower due to increasing supply and weakening demand.
- GWA Group Ltd (ASX: GWA) has short interest of 15.1%, which is up sharply week on week once again. Short interest has been increasing after the building products company warned that trading conditions would be tough in FY 2020.
- Inghams Group Ltd (ASX: ING) has short interest of 13.8%, which is flat week on week. The poultry producer is being targeted due to concerns that higher feed costs will weigh heavily on its profits in FY 2020.
- Orocobre Limited (ASX: ORE) has seen its short interest slide week on week again to 13.8%. Orocobre is another lithium producer that short sellers are targeting due to falling lithium prices.
- Costa Group Holdings Ltd (ASX: CGC) has seen its short interest surge higher to 13.5%. The horticulture company has disappointed investors with a series of downgrades. Short sellers may believe there’s more to come from Costa.
- NEXTDC Limited (ASX: NXT) has 13.1% of its shares held short, which is flat week on week. Short sellers are holding firm despite NEXTDC recently reaffirming its FY 2020 guidance. It expects EBITDA growth of 17% to 23% this year.
- Speedcast International Ltd (ASX: SDA) has short interest of 13%, which is up sharply week on week. It appears as though short sellers believe Speedcast will disappoint again in FY 2020.
- Bank of Queensland Limited (ASX: BOQ) has short interest of 12.5%, which is down slightly week on week. Last month management warned that FY 2020 would be tough and another decline in earnings is expected.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest drop to 11.4%. Short sellers continue to close positions after the retailer revealed solid sales growth so far in FY 2020.
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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited and NEXTDC Limited. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. 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.