At the start of each trading week I like to take a look at which shares are being targeted by short sellers.
When an investor shorts a company's shares they are borrowing shares to sell on market with the aim of buying them back at a lower price further down the line and pocketing the difference.
According to data provided by ASIC, at the moment short sellers are betting on the 10 shares below taking a tumble in the coming months:
- Syrah Resources Ltd (ASX: SYR) is still the most shorted share on the ASX with short interest of 20.5%. Concerns over supply and demand are likely to be the reason for the negative sentiment.
- Independence Group NL (ASX: IGO) has short interest of 16.9%. Short sellers appear doubtful that Independence will deliver on its production guidance this year.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 15.1% of its shares held short. After missing its guidance in FY 2017, short sellers appear to be expecting something similar in FY 2018.
- JB Hi-Fi Limited (ASX: JBH) has seen short interest fall to 14.4%. Weak consumer spending and the arrival of Amazon may be weighing on its shares.
- Healthscope Ltd (ASX: HSO) has short interest of 12.9%, down for a third week in a row. This could be a sign that investor sentiment is shifting positively for the healthcare company.
- Retail Food Group Limited (ASX: RFG) has short interest of 11.1%, down again week-on-week. But as the data from ASIC is delayed, this is likely to drop even further next week after recent short covering.
- Western Areas Ltd (ASX: WSA) has 9.7% of its shares in the hands of short sellers. Short interest has been falling in recent months due to improved nickel prices.
- Myer Holdings Ltd (ASX: MYR) has short interest of 9.6%. Last month Myer warned that sales were down sharply in December compared to the prior corresponding period. This may lead to the company falling short of expectations in FY 2018.
- Flight Centre Travel Group Ltd (ASX: FLT) has short interest of 9.6%. The travel agent's shares climbed strongly in 2017 and short sellers may believe they are overvalued now.
- Vocus Group Ltd (ASX: VOC) has entered the top ten with 9.2% of its shares held short. Telco shares have come under pressure over the last 12 months amid concerns over weaker-than-expected NBN margins.
