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 despite its short interest sliding to 16.9%. Short sellers are targeting the graphite miner due to the oversupply and softening demand for graphite.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest rebound to 16.6%. Galaxy has come under pressure this year after the lithium price sank lower due to increasing supply and weakening demand. Unfortunately, the battery making ingredient’s outlook is equally bleak.
- GWA Group Ltd (ASX: GWA) has short interest of 15.5%, which is up sharply week on week once again. The building products company continues to see its short interest rise after warning that trading conditions would be tough in FY 2020.
- Inghams Group Ltd (ASX: ING) has short interest of 14%, which is up slightly week on week. The poultry company continues to be a favourite of short sellers due to concerns that higher feed costs will hit its profits in FY 2020.
- Orocobre Limited (ASX: ORE) has seen its short interest remain flat week on week at 13.8%. As with Galaxy, weakening lithium prices have weighed heavily on this lithium miner’s shares.
- Speedcast International Ltd (ASX: SDA) has short interest of 13.1%, which is up sharply week on week. Short sellers may believe that Speedcast will disappoint again in FY 2020. Due to its high levels of debt, another poor performance could lead to a debt covenant breach.
- Bank of Queensland Limited (ASX: BOQ) has short interest of 12.25%, which is down slightly week on week. The regional bank has come under pressure this year due to its poor performance in FY 2019 and disappointing guidance for FY 2020.
- NEXTDC Limited (ASX: NXT) has 12% of its shares held short, which is down sharply week on week. Short sellers may be closing positions after it recently reaffirmed its FY 2020 guidance. The data centre operator expects EBITDA growth of 17% to 23% this year.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest drop to 11.3%. Short sellers are continuing to close positions after the retailer revealed solid sales growth so far in FY 2020.
- Webjet Limited (ASX: WEB) has entered the top ten with short interest of 11.2%. Short sellers have been targeting Webjet due to concerns over the Thomas Cook collapse and the growing popularity of Google Travel.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet 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.