Every Monday I like to start the week with a look at ASIC's short position report to find out which shares are being targeted by short sellers.
A short seller borrows shares to sell on market with the aim of buying them back at a lower price down the line and profiting from the difference. As it is a high-risk strategy with the potential for unlimited losses, short sellers will often only take a short position if they believe they have a high probability of success. Because of 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) continues to be the most shorted ASX share with short interest rising slightly to 20.3%. As well as concerns over future graphite prices, recent terror attacks not far from its Balama project have weighed on sentiment.
- Domino's Pizza Enterprises Ltd (ASX: DMP) has seen its short interest slide week-on-week to 16.2%. Brokers have become increasingly positive on Domino's recently, with many believing it has a good chance of hitting its full-year guidance.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest fall slightly week-on-week to 15.4%. Recent news that Kogan.com Ltd (ASX: KGN) aims to disrupt the white goods and built-in kitchen appliance market later this year will have pleased short sellers.
- Galaxy Resources Limited (ASX: GXY) has 14.3% of its shares held short, down sharply week-on-week. Short interest has continued to slide after the lithium miner agreed to sell several tenements at its Sal de Vida operation for US$280 million to South Korea's POSCO.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest rise yet again to 13.6%. Despite the department store operator's shares falling significantly over the last 12 months, short sellers appear to believe they can still go lower.
- Nanosonics Ltd (ASX: NAN) has seen its short interest slide to 12.6%. Short sellers continue to target the infection control specialist's shares despite not making their short case public.
- Orocobre Limited (ASX: ORE) has seen its short interest rise again to 12.2%. A spot of insider buying at the lithium miner last week could give short sellers something to think about.
- Vocus Group Ltd (ASX: VOC) has 12.1% of its shares held short. The embattled telco company's shares may have fallen notably lower during the last 12 months, but short sellers don't appear to believe they have bottomed yet.
- Australian Agricultural Company Ltd (ASX: AAC) has seen short interest slide to 11.8%. Short sellers may not believe the agribusiness company will bounce back in FY 2019 after a disastrous performance in FY 2018.
- InvoCare Limited (ASX: IVC) is back in the top ten with short interest of 11.1%. A reasonably high earnings multiple for its growth profile and possible market share losses could be weighing on investor sentiment.
