Every Monday 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) remains the most shorted share on the ASX with short interest of 17.3%. The lithium miner’s shares have come under significant pressure this year after a collapse in lithium prices smashed its margins and impacted its production plans.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest ease again to 15.8%. It looks as though many short sellers believe the worst is now priced into this graphite producer’s shares and are closing their positions.
- Orocobre Limited (ASX: ORE) has seen its short interest remain flat at 13.9%. Orocobre is another lithium miner which short sellers have successfully been targeting. It recently released a pricing update which revealed yet another sharp decline in lithium prices during the December quarter.
- Speedcast International Ltd (ASX: SDA) has short interest of 13.6%, which is up slightly week on week. Short sellers appear to believe that Speedcast will deliver another poor result in FY 2020. They may also have concerns over its material debt which is almost 3x its market capitalisation.
- Inghams Group Ltd (ASX: ING) has short interest of 12.65%, which is down week on week. Short sellers have been targeting the poultry producer due to a significant jump in feed costs because of the droughts.
- GWA Group Ltd (ASX: GWA) has short interest of 12.2%, which is down notably week on week. The building products company’s shares have come under pressure in recent months after management warned that tough trading conditions would impact its performance in FY 2020.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise slightly to 11.8%. Despite this high level of short interest, the retailer’s shares have been on fire this year and hit a new all-time high of $38.50 last week.
- NEXTDC Limited (ASX: NXT) has 11.8% of its shares held short, which is up slightly week on week again. The data centre operator recently revealed that it expects EBITDA growth of 17% to 23% in FY 2020. Some short sellers may not believe this growth is strong enough for the multiples it trades on.
- Nearmap Ltd (ASX: NEA) has entered the top ten with short interest of 11.1%. Short interest has continued to rise despite management recently guiding to record annualised contract value (ACV) of $116 million to $120 million in FY 2020. This will be a 28.6% to 33% increase year on year.
- Bega Cheese Ltd (ASX: BGA) has also entered the top ten with short interest of 11.1%. The food company’s poor performance in FY 2020 appears to have caught the eye of short sellers. At the end of October it warned that normalised EBITDA would fall 8.7% to 17.5% this year due partly to unprecedented competitive milk supply conditions.
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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 Nearmap 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.