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
- Lotus Resources Ltd (ASX: LOT) remains at the top of the table despite its short interest falling sharply to 14.8%. Short sellers may still have concerns over the uranium producer's ability to ramp up production and generate attractive returns from Kayelekera.
- DroneShield Ltd (ASX: DRO) has seen its short interest fall materially to 14.3%. The counter-drone technology company remains heavily shorted, possibly due to its valuation and the uncertainty created by the ASIC investigation.
- Boss Energy Ltd (ASX: BOE) has jumped back into the top ten with short interest of 12.8%. Short sellers may be questioning the uranium producer's longer-term production outlook and whether Honeymoon can deliver the growth expected by the market.
- IperionX Ltd (ASX: IPX) has seen its short interest rise to 12.4%. The titanium company continues to make progress with its US operations, but short sellers may believe its valuation already assumes a significant amount of future growth.
- 4DMedical Ltd (ASX: 4DX) has short interest of 12%, which is down slightly week on week. This may be due to the medical technology company's valuation, which could be difficult to justify based on its current revenue base.
- PLS Group Ltd (ASX: PLS) has seen its short interest rise to 11.7%. Short sellers may be positioning for continued weakness in lithium prices, which would put pressure on margins and cash flow.
- Domino's Pizza Enterprises Ltd (ASX: DMP) has short interest of 11.7%, which is down slightly since last week. Short sellers may still want to see stronger evidence that its restructuring can restore earnings growth.
- Zip Co Ltd (ASX: ZIP) has returned to the top ten with short interest of 11%. This could reflect concerns that higher interest rates will impact the buy now pay later company's performance.
- Treasury Wine Estates Ltd (ASX: TWE) has seen its short interest fall to 10.7%. Short sellers may remain concerned about luxury wine demand and how quickly the Penfolds owner can improve its performance in the Americas.
- Telix Pharmaceuticals Ltd (ASX: TLX) has short interest of 10.6%, down from 11% last week. Despite positive regulatory progress, short sellers aren't giving up on this one.
