At the start of each week I like to start the week with a quick look at which ASX shares are attracting the most unwanted attention from 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. But as rewarding as the strategy can be, it is a high risk one with theoretically limitless losses.
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 local share market with short interest of 20.1%. Despite this, the graphite producer's shares have risen 32% over the last 12 months.
- Independence Group NL (ASX: IGO) has short interest of 17.2%. Disappointing production delays last year at its Nova site appears to have weighed on investor sentiment.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has 16.1% of its shares held short, up sharply week-on-week. Short sellers may expect Domino's to deliver another disappointing result this year.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise once again, this time to 15.8%. However, not everyone is bearish on the retailer. Last week Morgan Stanley upgraded it to an overweight rating and added it to its model portfolio.
- Healthscope Ltd (ASX: HSO) has short interest of 13.3%. The healthcare company appears to have been targeted due to its weak outlook and falling private health insurance participation rates.
- Retail Food Group Limited (ASX: RFG) has short interest of 12.3%. Despite its shares losing 66% of their value over the last 12 months, some short sellers must think it can still sink even lower.
- HT&E Ltd (ASX: HT1) has short interest of 9.4%. The outdoor advertising company's Adshel business recently lost the Yarra Trams contract it had held for six years. This is expected to hit EBITDA by approximately $15 million.
- APN Outdoor Group Ltd (ASX: APO) has 9.4% of its shares held short. Short sellers appear to be especially bearish on the outdoor advertising industry suddenly.
- Flight Centre Travel Group Ltd (ASX: FLT) has re-entered the top ten with short interest of 9.3%. After a strong share price gain over the last 12 months, short sellers may think its shares have run too hard now.
- Myer Holdings Ltd (ASX: MYR) has short interest of 9.1%. Short sellers may be betting that the embattled retailer had a disappointing Christmas trading period.
