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:
- Galaxy Resources Limited (ASX: GXY) is now the most shorted share on the ASX with short interest of 17%. A collapse in lithium prices continues to weigh on this lithium miner’s performance, production plans, and ultimately its shares.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest ease significantly to 16%. Short sellers may believe the worst is now priced into this graphite producer’s shares and are closing their positions.
- GWA Group Ltd (ASX: GWA) has short interest of 14.7%, which is down week on week once again. Short sellers have been targeting the building products company after it warned that tough trading conditions would impact its performance in FY 2020.
- Inghams Group Ltd (ASX: ING) has short interest of 14.1%, which is flat week on week. A jump in feed costs because of the droughts is weighing on this poultry company’s margins and shares.
- Orocobre Limited (ASX: ORE) has seen its short interest rise week on week to 13.9%. Last week the lithium miner released a pricing update and revealed yet another sharp decline in lithium prices during the December quarter.
- Speedcast International Ltd (ASX: SDA) has short interest of 13.3%, which is down slightly week on week. Short sellers appear to believe that Speedcast will deliver another poor result in FY 2020.
- NEXTDC Limited (ASX: NXT) has 11.5% of its shares held short, which is down week on week again. Short sellers have been closing positions since the data centre operator revealed that it expects EBITDA growth of 17% to 23% in FY 2020.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise slightly to 11.5%. Unfortunately for short sellers, last week the retailer’s shares hit a new all-time high of $38.31.
- Webjet Limited (ASX: WEB) is back in the top ten with short interest of 10.9%. Competition from Google and the Thomas Cook collapse have weighed on Webjet’s shares this year.
- Mineral Resources Limited (ASX: MIN) is a new entry in the top ten with 10.9% of its shares held short. Short sellers may be targeting Mineral Resources due to its exposure to lithium.
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 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.