Every Monday I like to take a look at which ASX shares are attracting the most unwanted interest from short sellers.
When an investor decides to "short" a company's shares, they are borrowing shares to sell on market with the aim of buying them back at a lower price further down the line.
As there is theoretically limitless losses, it is certainly a high-risk investment strategy. But as we have seen with the likes of Bellamy's Australia Ltd (ASX: BAL) this year, it can also be a rewarding strategy.
According to data provided by ASIC, here are the 10 most shorted shares on the ASX this week:
- Aconex Ltd (ASX: ACX) has become the most shorted shares on the ASX again with short interest rising to 17.1%. The software-as-a-service company's share price has fallen 31% so far year-to-date, but short sellers clearly believe it could drop further.
- Myer Holdings Ltd (ASX: MYR) has seen short interest drop sharply to 15.7% ahead of its half-year results announcement at the end of this week.
- Orocobre Limited (ASX: ORE) now has 14.4% of its shares in the hands of short sellers, up strongly since last week. Investors appear to be bearish on the lithium miner's prospects after a cut to its annual production guidance.
- TFS Corporation Limited (ASX: TFC) has 14% of its shares held short. This is hardly a surprise considering the sandalwood plantation manager recently reported a 58% drop in net profit after tax.
- Western Areas Ltd (ASX: WSA) has seen short interest remain steady at 13.8%. I'm still quite bearish on the nickel producer this year due to Indonesia's decision to lift its ban on nickel exports. Any hope of a recovery in prices this year appears to have been ruled out now.
- Syrah Resources Ltd (ASX: SYR) has once again seen short interest rise, this time to 12.1%. Year-to-date the graphite miner's share price has fallen almost 17%.
- Vocus Group Ltd (ASX: VOC) has seen short interest rise slightly to 11.7%. Although the rising short interest is a concern, I believe the telco company's relatively cheap price and strong growth prospects could make it a great investment right now.
- Nine Entertainment Co Holdings Ltd (ASX: NEC) has short interest of 11%, up slightly on last week. The media company's share price has fallen 31% since this time last year.
- Metcash Limited (ASX: MTS) has 10.2% of its shares in the hands of short sellers. Short interest in the wholesale distributor has risen slightly since last week.
- Worleyparsons Limited (ASX: WOR) has 9.7% of its shares held short. Last week 13.8% of its shares were held short, but a takeover offer quickly sent short sellers scrambling to close their positions.
