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 Australian share market with short interest of 16.4%. Short sellers continue to target the lithium miner despite recent positive industry developments.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest rebound to 16.4%. This graphite producer has been targeted due to a sustained decline in prices due to oversupply concerns.
- Orocobre Limited (ASX: ORE) has seen its short interest rise to 13.8%. This lithium miner’s shares have also been racing higher this year, but this doesn’t appear to have put off short sellers.
- Speedcast International Ltd (ASX: SDA) has short interest of 12.9%, which is up week on week. Short sellers may expect another disappointing result from this communications satellite technology next month. Which would be bad news given its massive debt.
- Inghams Group Ltd (ASX: ING) has short interest of 12.4%, which is down week on week. This poultry producer has come under pressure in recent months due to concerns over rising feed costs due to the droughts and bushfires.
- Nearmap Ltd (ASX: NEA) has seen its short interest remain flat at 12.1%. This high level of short interest may be due to concerns over growing competition and softening margins.
- NEXTDC Limited (ASX: NXT) has 12.1% of its shares held short, which is up week on week. Growing competition in the data centre market and its high PE ratio may be behind its high level of short interest.
- GWA Group Ltd (ASX: GWA) has short interest of 11.9%, which is flat week on week. Short sellers have been going after the building products company after it warned that trading conditions would be tough in FY 2020.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest remain flat at 11.8%. This appears to be due to concerns that the retailer is in a structural decline due to the rise of online shopping.
- Costa Group Holdings Ltd (ASX: CGC) has seen its short interest rise slightly to 11.3%. Costa has been a target of short sellers for some time due to its countless earnings downgrades following tough trading 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.