Every Monday I like to take a look through the data provided by ASIC to see which ASX shares are currently being targeted by short sellers.
Although short sellers will often get it wrong, I believe investors should pay close attention to high levels of short interest as it could be seen as an early warning sign of a share price decline.
At present these are the 10 most shorted shares on the ASX:
- Orocobre Limited (ASX: ORE) is once again the most shorted share on the ASX with 21.7% of its shares held short. Short interest in the lithium miner has continued to climb higher, several weeks after it made a surprising cut to its annual production guidance.
- Western Areas Ltd (ASX: WSA) has seen its short interest jump to 16.5%. With nickel prices sliding lower, it appears short sellers have become more bearish and increased their positions.
- Syrah Resources Ltd (ASX: SYR) has short interest of 16.1%, up sharply since last week. At the end of last week the graphite miner released a strong quarterly report which will no doubt give short sellers something to think about this week.
- Aconex Ltd (ASX: ACX) has 15% of its shares held short. Despite the high level of short interest, the software-as-a-service company's shares rallied around 12% in April.
- Vocus Group Ltd (ASX: VOC) now has 13.2% of its shares in the hands of short sellers, up sharply since last week. Whilst I think Vocus looks to be great value at the current share price, the rising short interest is certainly a concern.
- Myer Holdings Ltd (ASX: MYR) has seen short interest fall again to 12.6%. Whilst no takeover offer from Premier Investments Limited (ASX: PMV) has materialised, the prospect of one has led many short sellers to close their positions.
- Quintis Ltd (ASX: QIN) has 11.6% of its shares held short. This sandalwood plantation manager has been targeted by short sellers after its business model was compared to a Ponzi scheme by a U.S. research firm.
- Nine Entertainment Co Holdings Ltd (ASX: NEC) has 11.2% of its shares held short. Considering the shocking performance of rival Ten Network Holdings Limited (ASX: TEN), I can't say I'm surprised to see short sellers take an interest in Nine Entertainment.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 10.8% of its shares held short. Although the short interest is a concern, I believe Domino's could prove to be a great buy and hold investment at the current price.
- Mayne Pharma Group Ltd (ASX: MYX) has 10.7% of its shares in the hands of short sellers. Whilst there are concerns over price-fixing allegations, I think the pharmaceutical company could be a great option for patient buy and hold investors.
