At the start of each week I like to look at which shares are being targeted by short sellers.
As short selling is one of the riskiest strategies out there, short sellers will generally only take out a position if they have a high conviction of success. Considering this, I think it is prudent for investors to keep a close eye on short interest levels.
According to data provided by ASIC, here are the 10 most shorted shares on the ASX this week:
- Syrah Resources Ltd (ASX: SYR) is yet again the most shorted share on the ASX with short interest of 20.8%. Short sellers appear to be betting that Syrah won't be as profitable as first expected.
- Domino's Pizza Enterprises Ltd. (ASX: DMP) has seen its short interest rise to 17%, making it the second-most shorted share on the local market. The pizza chain operator has come under pressure after falling short of expectations during earnings season.
- Independence Group NL (ASX: IGO) has short interest of 16%, down notably week-on-week. Some short sellers may be admitting defeat on this one and closing positions. Independence's shares are up 27% over the last 12 months.
- JB Hi-Fi Limited (ASX: JBH) has 15.7% of its shares held short, down slightly from last week. Short sellers may be targeting the retailer due to concerns over the threat of online competition.
- Galaxy Resources Limited (ASX: GXY) has 14.2% of its shares held short, up slightly since last week. Short sellers may be regretting this one already. Last week the lithium miner's shares rose 14% after sentiment shifted positively on lithium demand once again.
- Healthscope Ltd (ASX: HSO) has short interest of 13.2%. The private hospital operator has come under pressure from short sellers due to concerns that falling private health insurance numbers is continuing to negatively impact its business.
- Vocus Group Ltd (ASX: VOC) has short interest of 11.4%. Investor sentiment in the telco industry continues to remain negative amid concerns about increased competition and lower margins.
- HT&E Ltd (ASX: HT1) still has 11.3% of its shares held short. Short interest has fallen notably lower since the outdoor advertising company released a better than expected half-year result last month.
- Flight Centre Travel Group Ltd (ASX: FLT) has returned to the top ten with short interest of 10.8%. Short sellers may believe that the travel agent's shares are overvalued following an impressive share price rally.
- Retail Food Group Limited (ASX: RFG) has short interest of 10.7%, down sharply week-on-week. It looks as though many short sellers are now locking in their gains after the embattled food and beverage company's shares sank 80% lower over the last 12 months.
