Every Monday I like to start the week with a look at which shares short sellers are betting will decline in value over the coming months.
Whilst short sellers certainly don't always get it right, as I wrote last week, when they do it can be a very rewarding strategy.
As a result, I believe it is wise to be cautious when shares suddenly see their short interest rise to high levels.
According to the most recent data from ASIC, these are the 10 most shorted shares on the ASX at present:
- Western Areas Ltd (ASX: WSA) has continued as the most shorted share on the ASX with short interest of 20.1%. Although nickel prices had shown signs of improvement, increased supply sent prices tumbling again recently.
- Orocobre Limited (ASX: ORE) has seen its short interest remain flat at 19.3%. Short sellers have taken aim at the lithium miner following a number of production downgrades.
- Syrah Resources Ltd (ASX: SYR) short interest has continued its rise and reached 18.7%. Delays at its massive Balama graphite project just before it was due to open are likely to be behind the rise.
- Myer Holdings Ltd (ASX: MYR) has 16.6% of its shares in the hands of short sellers. Short interest in the department store operator continues to build after its recent full-year profit guidance downgrade.
- Independence Group NL (ASX: IGO) has seen short interest edge higher to 14.5%. Short sellers appear to have targeted Independence due to delays at its Nova operation and its increasing all-in sustaining costs.
- JB Hi-Fi Limited (ASX: JBH) has seen short interest fall reasonably sharply to 12.7%. Short interest in the retailer has been at high levels since it became apparent that Amazon was planning to launch in Australia.
- Retail Food Group Limited (ASX: RFG) has 12.6% of its shares held short. The food and beverage company's shares are down 30% year-to-date.
- iSentia Group Ltd (ASX: ISD) has bounced back into the top ten with short interest of 12.1%. A surprise full-year profit downgrade at the start of the month is likely to have triggered the rise in short interest.
- Ardent Leisure Group (ASX: AAD) has short interest of 11.9%, down slightly week-on-week. Last week the entertainment company released its full-year result which revealed core EBITDA of $76 million, ahead of its guidance of $73 million to $75 million.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 11.5% of its shares in the hands of short sellers. Short sellers appear to have targeted the pizza chain operator amid concerns over the performance of its European business.
