Every Monday I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.
This is because I believe it is well 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:
- Webjet Limited (ASX: WEB) continues to be the most shorted share on the ASX following a sharp rise in its short interest to 17.5%. Short sellers appear increasingly confident that the online travel agent’s shares are going a lot lower from here. I would have to agree that Webjet looks severely overvalued at present.
- Speedcast International Ltd (ASX: SDA) has short interest of 11.15%. The communications satellite technology provider’s shares continue to be suspended whilst it undertakes its chapter 11 recapitalisation. Further progress was made last week when it filed a motion seeking court approval to replace its debtor-in-possession financing.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest rise to 10.9%. Short sellers have been increasing their positions after the department store operator’s full year results. Myer posted a 41.6% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to $305.3 million.
- InvoCare Limited (ASX: IVC) has short interest of 9.5%, which is up week on week yet again. Short sellers have been building a position in this funerals company since the release of its weak half year result. They appear confident more of the same is coming in the months ahead.
- FlexiGroup Limited (ASX: FXL) has 8.2% of its shares held short, which is up week on week. While the company’s buy now pay later business is performing well, there appears to be concerns over the rest of its business.
- CLINUVEL Pharmaceuticals Limited (ASX: CUV) has also seen its short interest increase slightly to 8.2%. Short sellers have been increasing their positions despite the biopharmaceutical company announcing plans to extend the use of its SCENESSE product to treat xeroderma pigmentosum.
- Inghams Group Ltd (ASX: ING) has 8.2% of its shares held short, which is flat week on week. Concerns over higher input costs has been weighing on this poultry company’s shares in 2020.
- Bank of Queensland Limited (ASX: BOQ) has seen its short interest rise to 7.4%. This regional bank has come under pressure this year after it warned that trading conditions were expected to remain tough for the foreseeable future.
- Freedom Foods Group Ltd (ASX: FNP) has entered into the top ten despite being halted from trade. The diversified food company has 6.95% of its shares in the hands of short sellers. Freedom Foods is currently suspended whilst it sorts out its accounts after some shocking revelations this year.
- Orocobre Limited (ASX: ORE) is back in the top ten with short interest of 6.9%. Australian lithium miners have been strong performers in recent months due to the belief that prices of the battery making ingredient have now bottomed. Though, it looks as though some short sellers don’t appear convinced that this is the case.
Finally, instead of those most shorted shares, I would be buying the exciting shares recommended below...
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended FlexiGroup Limited, Freedom Foods Group Limited, and InvoCare Limited. 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.