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) remains the most shorted share on the ASX and has seen its short interest rise to 17.2%. Short sellers continue to target the graphite miner due to a collapse in the price of the battery making ingredient.
- Galaxy Resources Limited (ASX: GXY) isn’t far behind with short interest of 16.9%. Sustained weakness in lithium prices is largely behind the high level of short interest.
- GWA Group Ltd (ASX: GWA) has short interest of 15.4%, which is down slightly week on week once again. Short sellers appear to believe that tough trading conditions will weigh on the building products company’s performance in FY 2020.
- Inghams Group Ltd (ASX: ING) has short interest of 14.1%, which is up slightly week on week. Short sellers are expecting a weak result from the poultry company in FY 2020 due to sky high feed costs.
- Orocobre Limited (ASX: ORE) has seen its short interest soften week on week to 13.7%. As with Galaxy, a collapse in lithium prices is weighing the lithium miner’s shares.
- Speedcast International Ltd (ASX: SDA) has short interest of 13.5%, which is up sharply week on week. Short sellers don’t appear to believe that Speedcast is over the worst of its issues and another poor result could be coming in FY 2020.
- Bank of Queensland Limited (ASX: BOQ) has short interest of 12.4%, which is up slightly week on week. The regional bank’s shares sank to a multi-year low last week after it raised $250 million to strengthen its balance sheet. Bank of Queensland continues to expect earnings to decline again in FY 2020.
- NEXTDC Limited (ASX: NXT) has 11.9% of its shares held short, which is down week on week once again. The data centre operator recently advised that it expects EBITDA growth of 17% to 23% this year. This appears to have led to some short sellers closing positions.
- Costa Group Holdings Ltd (ASX: CGC) is back in the top 10 with short interest of 11.4%. Short sellers appear to believe that the horticulture company is destined to fall short of its guidance yet again in 2020.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest remain flat at 11.3%. Much to the dismay of short sellers, the retailer’s shares closed the week within sight of their all-time high.
Instead of those highly shorted shares, I would buy these buy-rated stocks which have been tipped for very big things.
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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.