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) remains the most shorted share on the Australian share market for yet another week. The graphite miner has 20.2% of its shares held short amid concerns that its Balama project may not be enjoying as high prices as initially expected.
- Independence Group NL (ASX: IGO) has short interest of 16.9%. Although Independence recently delivered a reasonably solid December quarterly update, it hasn't been enough to put off short sellers.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has short interest of 16.5%. Short sellers will no doubt be pleased with the pizza chain operator's weak first-half result release last week. Management has, however, held firm its full-year guidance.
- JB Hi-Fi Limited (ASX: JBH) has 14.2% of its shares held short. Although JB Hi-Fi released a decent first-half result last week, short sellers will have been relieved to see that its outlook was reasonably disappointing.
- Healthscope Ltd (ASX: HSO) has short interest of 14%. Last week the private hospital operator reported a disappointing 17% decline in operating net profit after tax to $78.2 million. The private hospital operator also announced a cut to its dividend.
- Retail Food Group Limited (ASX: RFG) has short interest of 12.8%. It appears as though short sellers may expect more bad news out of the embattled food and beverage company when its releases its half-year results later this week.
- HT&E Ltd (ASX: HT1) has 11% of its shares held short. The outdoor advertising company's half-year result last week led to a sharp increase in its share price, much to the dismay of short sellers.
- Galaxy Resources Limited (ASX: GXY) has 10.7% of its shares held short. Short sellers may be targeting Galaxy due concerns over the potential future oversupply of the metal.
- Mayne Pharma Group Ltd (ASX: MYX) has short interest of 10.3%. The pharmaceutical company is due to release its half-year results later this week which will reveal whether it is still being negatively impacted by pricing pressures in the United States.
- Vocus Group Ltd (ASX: VOC) shares have entered the top 10 with short interest of 10% ahead of its results release later this week. Short sellers appear to be expecting a disappointing result.
