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) continues to be the most shorted share on the ASX despite a reduction in its short interest to 18.1%. Short sellers don’t appear to believe that the worst is over for the lithium miners.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest slide to 16.6%. This graphite producer’s shares have come under pressure over the last 18 months due to a sustained decline in the price of its graphite. This has been caused by to oversupply concerns.
- Nearmap Ltd (ASX: NEA) has seen its short interest jump to 14%. Short sellers have increased their positions following a disappointing guidance downgrade late last month. Short sellers appear to believe that things could get worse before they get better.
- Orocobre Limited (ASX: ORE) has seen its short interest drop lower again to 13.2%. As with Galaxy, this lithium miner has been targeted due to weakening lithium prices from softer demand and increasing supply.
- Speedcast International Ltd (ASX: SDA) has short interest of 12.3%, which is down week on week. The communications satellite technology provider’s shares are currently in a trading halt whilst it prepares an announcement relating to its upcoming results. It has also just announced the resignation of its CEO.
- Inghams Group Ltd (ASX: ING) has short interest of 12.2%, which is up slightly week on week. Concerns over rising feed costs because of the droughts and bushfires continue to weigh on this poultry producer’s shares.
- GWA Group Ltd (ASX: GWA) has short interest of 11.7%, which is down week on week. This building products company will be one to watch this month. Last year it warned that trading conditions would be tough in FY 2020.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest fall slightly to 11.1%. Later today the retailer will release its half year results. Short sellers will be hoping that JB Hi-Fi doesn’t smash expectations.
- Bega Cheese Ltd (ASX: BGA) is back in the top ten with short interest of 11%. The food company’s performance in FY 2020 has been impacted by the fierce competition for milk.
- Costa Group Holdings Ltd (ASX: CGC) has seen its short interest rise slide to 10.9%. Short sellers appear to have been closing their positions in the horticulture company after trading conditions improved greatly in January.
Instead of those highly shorted shares, I would snap up these high quality shares which have been tipped as strong buys.
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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and 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.