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At the start of each week, 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:
- Pilbara Minerals Ltd (ASX: PLS) is far and away the most shorted share on the Australian share market with short interest of 21.6%. This is up slightly week on week. Short sellers appear to be betting on lithium prices staying lower for longer and crunching the company's profits.
- IDP Education Ltd (ASX: IEL) has 13.1% of its shares held short, which is up slightly since last week. This language testing and student placement company recently revealed that it is being negatively impacted by student visa changes in a number of key markets. As a result, flat earnings and expected by analysts this year and an earnings decline is forecast the year after.
- Liontown Resources Ltd (ASX: LTR) has 10.4% of its share held short, which is up slightly week on week once again. The company will shortly commence lithium production at the Kathleen Valley Project. This isn't perhaps the best time to be adding to lithium supply.
- Syrah Resources Ltd (ASX: SYR) has short interest of 10.2%, which is down week on week again. This graphite miner's shares have fallen heavily over the last 12 months due to weak battery materials prices, production suspensions, and its ongoing cash burn.
- Flight Centre Travel Group Ltd (ASX: FLT) has seen its short interest rebound to 10%. Short sellers appear to believe that the travel agent will fall short of the market's revenue margin expectations.
- Westgold Resources Ltd (ASX: WGX) has short interest of 10%, which is now up for a sixth week in a row. Doubts over the gold miner's proposed merger with Canada-based Karoa Resources appear to be behind this.
- Sayona Mining Ltd (ASX: SYA) has short interest of 9.7%, which is up since last week. This lithium miner is currently paying more to pull lithium out of the ground than it receives from buyers. Not a great business model.
- Chalice Mining Ltd (ASX: CHN) has short interest of 9.6%, which is up week on week again. While this mineral exploration company's Gonneville Project is a globally significant critical minerals project, it is still years away from commencing production or even a final investment decision. Some investors also believe the assumptions used its project studies are a touch ambitious.
- Australian Clinical Labs Ltd (ASX: ACL) has short interest of 8.4%, which is down slightly since last week. This struggling health imaging company is guiding to yet another sharp decline in its earnings in FY 2024.
- Weebit Nano Ltd (ASX: WBT) returns to the top ten with 8.3% of its shares held short. This semiconductor company's shares have crashed 70% over the last 12 months. Short sellers don't appear to believe the declines are over given its lofty valuation and pitiful revenue generation.
