At the start of each week I like to look at which shares are being targeted by short sellers. As short selling can be one of the riskiest investment strategies out there, short sellers will generally only take out a position when they have a high conviction of success.
Because of this, I believe it is prudent for investors to keep a close eye on what short sellers are doing.
Here are the 10 most shorted shares on the ASX according to data provided by ASIC:
- Syrah Resources Ltd (ASX: SYR) has continued to be the most shorted share on the ASX with short interest of 21.2%. Short sellers appear to be targeting Syrah due to the fears that its Balama project won't be as profitable as first expected.
- Domino's Pizza Enterprises Ltd (ASX: DMP) has seen its short interest rise slightly week-on-week to 16.5%. Opinion appears divided on whether the pizza chain operator will fall short of its guidance again in FY 2018.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest fall week-on-week to 15.8%. Short sellers have been targeting the retailer after it downgraded its full-year profit guidance due to a weak performance from its Good Guys business.
- Galaxy Resources Limited (ASX: GXY) has 14.6% of its shares held short, down slightly week-on-week. Investor sentiment in the lithium miners improved last week after Tesla signed an offtake agreement with Kidman Resources (ASX: KDR).
- Nanosonics Ltd (ASX: NAN) has seen its short interest slide to 12.3%. The infection control specialist has come under pressure this year after a weaker than expected half-year result.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest rise to 12.1%. The department store operator released its latest quarterly results last week, revealing yet another decline in sales.
- Vocus Group Ltd (ASX: VOC) has seen short interest fall slightly to 12%. Like many in the telco sector, investors have been concerned by the increasingly competitive environment and slim NBN margins.
- Orocobre Limited (ASX: ORE) has seen short interest remain flat at 11.5%. Orocobre has fallen out of favour this year amid concerns over future lithium prices and a full-year production downgrade due to unfavourable weather conditions.
- Australian Agricultural Company Ltd (ASX: AAC) has seen short interest rise slightly to 11.4%. This month the agribusiness advised that operating EBITDA is expected to be down 65% to 73% in FY 2018.
- News Corp (ASX: NWS) has entered the top ten with short interest of 11.1%. The media company's shares are up 21% in 12 months and short sellers appear to believe they have run too hard now.
- Bonus: Just a fraction outside the top ten this week are BWX Ltd (ASX: BWX), HT&E Ltd (ASX: HT1), InvoCare Limited (ASX: IVC), and Retail Food Group Limited (ASX: RFG) with short interest of approximately 10.5% each.
