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 once again the most shorted share on the ASX by some distance. This is despite its short interest falling meaningfully to 18.1%. Short sellers have been targeting Galaxy due to an oversupply of lithium.
- Speedcast International Ltd (ASX: SDA) has short interest of 13.2%, which is flat week on week. The communications satellite technology provider’s shares have been suspended since the start of February and are due to return today. However, the company appears to be struggling to arrange financing, which could mean another extension will be requested.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest slide to 13.1%. Last week Syrah announced the suspension of its Balama operation due to the coronavirus outbreak. This could be a blessing in disguise given the oversupply of graphite in the market.
- Orocobre Limited (ASX: ORE) has seen its short interest drop to 13%. Short sellers have been going after this lithium miner due to falling prices of the battery making ingredient.
- Inghams Group Ltd (ASX: ING) has short interest of 11.2%, which is down week on week once again. Short sellers may believe the poultry company’s shares have bottomed after its recent share price weakness. Especially given how more people are eating at home.
- New Century Resources Ltd (ASX: NCZ) has seen its short interest remain flat at 10.1%. The base metal producer’s shares have fallen heavily over the last 12 months and short sellers appear to believe they can go further.
- JB Hi-Fi Limited (ASX: JBH) is back in the top ten with short interest rising to 9.7%. Short sellers may believe the retailer’s performance could be impacted by the coronavirus outbreak.
- Pilbara Mineral Ltd (ASX: PLS) has short interest of 9.5%, which is down slightly since last week. Pilbara Minerals is another lithium miner which has fallen heavily over the last 12 months due to weakening lithium prices.
- Metcash Limited (ASX: MTS) has short interest of 9.4%, which is down sharply week on week. Short sellers appear to have been closing positions due to the panic buying which the wholesale distributor is likely to be benefiting greatly from.
- Clinuvel Pharmaceuticals Limited (ASX: CUV) has entered the top ten with short interest of 9.2%. Investors may believe the biopharmaceutical company’s shares are overvalued at the current level. Even after falling over 50% from their 52-week high, its shares are changing hands at 52x earnings.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.