Once a week, I like to look at ASIC's short position report to find out which ASX shares are being targeted by short sellers.
That's 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, listed below are the 10 most shorted shares on the ASX this week according to ASIC.
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The top 10 most shorted ASX shares
DroneShield Ltd (ASX: DRO) remains at the top of the table with short interest of 15.4%, which is up week on week. The counter-drone technology company continues to attract plenty of attention from short sellers, possibly due to its valuation and the ongoing ASIC investigation.
Lotus Resources Ltd (ASX: LOT) has seen its short interest jump to 15%. Short sellers may still have concerns over the uranium developer's funding requirements and the execution needed to deliver its growth plans.
4DMedical Ltd (ASX: 4DX) has short interest of 12.3%, which is down slightly week on week. The medical imaging technology company remains heavily shorted as investors weigh its significant growth potential against a very high valuation.
Domino's Pizza Enterprises Ltd (ASX: DMP) has seen its short interest ease to 12%. Short sellers may be unconvinced that the pizza chain operator's restructuring and store closures will be enough to restore strong earnings growth.
Treasury Wine Estates Ltd (ASX: TWE) has short interest of 11.8%, which is down slightly week on week. Weakness in parts of the global wine market and uncertainty around the company's recovery continue to give short sellers something to focus on.
PLS Group Ltd (ASX: PLS) has 11.1% of its shares held short, which is broadly unchanged since last week. Short sellers may be expecting lithium prices to be under pressure, which would weigh on margins.
Zip Co Ltd (ASX: ZIP) has seen its short interest rise to 11.1%. The buy now pay later company's strong share price recovery may have encouraged some investors to bet that expectations are becoming too optimistic.
Elders Ltd (ASX: ELD) has returned to the top ten with short interest of 10.9%. Short sellers may have concerns over rural spending conditions and the outlook for earnings growth across the agribusiness.
Paladin Energy Ltd (ASX: PDN) has seen its short interest fall to 10.7%. Despite this, short sellers may still believe expectations for uranium prices and future production are running ahead of reality.
Flight Centre Travel Group Ltd (ASX: FLT) has seen its short interest ease again to 10.6%. Short sellers may remain cautious on the travel agent due to margin pressure, consumer spending conditions, and disruption to international travel.
