When investors short a share they are borrowing shares to sell on market with the aim of buying them back at a cheaper price further down the line.
While it can be a lucrative investment strategy, it is worth remembering that it comes with high risks and theoretically limitless losses.
According to the most recent data provided by ASIC, 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 21.5% of its shares in the hands of short sellers. The lithium miner's shares are down sharply this year following a surprise reduction in its full-year production guidance.
- Syrah Resources Ltd (ASX: SYR) has short interest of 17.7%, up sharply for the third week in a row. Research firm Viceroy recently released a detailed manifesto of how they believe the graphite miner is overvalued and heading for a heavy fall.
- Western Areas Ltd (ASX: WSA) has seen a slight drop in short interest to 17.1%. With nickel prices expected to remain subdued for the foreseeable future, I wouldn't be in a rush to invest in the nickel miner.
- Vocus Group Ltd (ASX: VOC) has short interest of 16.3%, up slightly on last week. Despite the rising short interest, the telco company's shares have climbed almost 14% in the last five trading sessions.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest rise again to 13.7%. A disappointing quarterly update from the department store and a weak retail environment continue to weigh heavily on its shares.
- Aconex Ltd (ASX: ACX) has 13.5% of its shares held short. Whilst this is a slight week-on-week rise in short interest for the software-as-a-service company, it has fallen sharply in the last few months.
- Independence Group NL (ASX: IGO) has seen short interest increase to 13.2%. Delays to production at its lucrative Nova mine appear to be the reason why short sellers have taken an interest in this leading gold miner.
- Mayne Pharma Group Ltd (ASX: MYX) now has 13.2% of its shares in the hands of short sellers. Price-fixing allegations and Trump's policies on generic drugs are largely behind the negative sentiment. Whilst I'm a big fan of the company, the rising short interest is a concern.
- Bellamy's Australia Ltd (ASX: BAL) has 12.4% of its shares held short. Short sellers appear to be targeting the infant formula company after its shares rocketed 20% higher in the last three months without any meaningful news.
- iSentia Group Ltd (ASX: ISD) has sneaked into the top 10 with short interest of 11.5%. Although there have been signs of improvement at the media monitoring company, short sellers appear to believe the problems with its content marketing business are not over.
