Whilst the majority of investors want share prices to appreciate, not all of them do.
Some will borrow shares to sell on market with the aim of buying them back at a cheaper price down the line. This high risk investment strategy is known as short selling or shorting.
According to the most recent data provided by ASIC, the 10 most shorted shares on the ASX are as follows:
- Syrah Resources Ltd (ASX: SYR) remains the most shorted share on the ASX with short interest of 19.6%. Despite the high level of short interest the graphite miner's shares have rallied 42% in the space of a month.
- Orocobre Limited (ASX: ORE) has seen short interest continue to fall, this time to 17%. A solid full-year result in August and an increasingly bullish outlook for lithium demand appears to have short sellers concerned.
- Western Areas Ltd (ASX: WSA) has also seen short interest slide. The nickel producer now has 15.3% of its shares in the hands of short sellers. But with nickel prices weakening last week, short sellers may soon return.
- Myer Holdings Ltd (ASX: MYR) has 15.3% of its shares held short. Short sellers will have been pleased to see Myer's shares sink lower following its earnings release last week.
- Independence Group NL (ASX: IGO) has seen its short interest rise slightly to 15%. After a strong run due to rising tensions in North Korea, I'd agree with short sellers that its shares look reasonably expensive.
- Select Harvests Limited (ASX: SHV) has 13.4% of its shares in the hands of short sellers. The almond producer has come under pressure recently after a decline in production volumes led to a 73% fall in its reported full-year net profit after tax.
- Retail Food Group Limited (ASX: RFG) has 13.1% of its shares held short. Short sellers don't appear to have been impressed with the food and beverage company's underlying NPAT growth guidance of circa 6% in FY 2018.
- JB Hi-Fi Limited (ASX: JBH) has short interest of 13.1%, up sharply on last week. The potential arrival of Amazon in Australia before Christmas appears to be weighing heavily on investor sentiment.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 12.9% of its shares held short. A disappointing full-year result has led to a significant decline in its share price recently, but a solid gain on Friday could be a sign that its shares have bottomed now.
- Ardent Leisure Group (ASX: AAD) has short interest of 12%. Short sellers may be targeting the entertainment due to the underperformance of its growth engine in the United States. Constant centre sales at its Main Event centres have underwhelmed recently.
