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) continues as the most shorted share on the ASX with short interest of 19.7%. Last week severe weather forced the lithium miner to downgrade its full-year production for the second time this year.
- Syrah Resources Ltd (ASX: SYR) isn't far behind with short interest of 19%. Short sellers have targeted the miner over concerns that its massive Balama Project will upset graphite's supply-demand balance when it finally opens.
- Western Areas Ltd (ASX: WSA) has seen short interest drop to 15.8%. A weak nickel price has weighed heavily on the miner's shares. But due to its cost-savings, when prices do eventually improve, I think Western Areas could be worth a look.
- Myer Holdings Ltd (ASX: MYR) has 15.2% of its shares in the hands of short sellers. The department store operator's shares are down 36% this year but some investors still appear to believe they can fall further.
- Independence Group NL (ASX: IGO) has seen short interest rise slightly to 15%. Production delays at its Nova mine have weighed heavily on the gold miner this year. Its shares are down 29% compared to a 10% gain by the gold index.
- Metcash Limited (ASX: MTS) has 13% of its shares held short. Short interest in the wholesale distributor has been building up ahead of this week's full-year results.
- Mayne Pharma Group Ltd (ASX: MYX) has 12.9% of its shares in the hands of short sellers. Although I think its shares are dirt cheap, until President Trump's policies on drug prices are known I would hold off an investment.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has short interest of 12.8%. Short sellers took an interest in Domino's following allegations that a number of its licensees have underpaid staff.
- Aconex Ltd (ASX: ACX) has 12.5% of its shares held short. Short interest in the software-as-a-service company continues to fall, which I feel could be a sign that sentiment is shifting positively.
- iSentia Group Ltd (ASX: ISD) has short interest of 12%. Concerns over the underperformance of its content marketing business are behind the high level of short interest. Whilst I think its shares are cheap, until the segment's performance improves I would stay clear of the media intelligence company.
