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.
Short sellers will borrow shares to sell on-market with the aim of buying them back at a lower price in the future and profiting from the difference. It is a high-risk strategy with the potential for unlimited losses, so short sellers will often only take a short position when they believe they have a high probability of success. Because of this I think it is important for investors to keep a close eye on short interest levels.
Here are the 10 most shorted shares on the ASX this week:
- Syrah Resources Ltd (ASX: SYR) remains the most shorted share in the ASX for another week with short interest rising to 20.6%. The graphite miner recently downgraded its full-year production guidance and advised that it had sold only 72% of its produce during the last quarter.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest slide to 18.4%. Short sellers appear to have closed positions following the release of the retailer's full-year results last week.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest rise again to 17.5%. This morning the lithium miner released an increase in mineral resource for its Mt Cattlin operation. This may give short sellers something to think about.
- Orocobre Limited (ASX: ORE) has short interest of 15.8%, up week-on-week once again. Short interest in lithium miners such as Orocobre and Galaxy continues to rise due to concerns over future lithium prices.
- Domino's Pizza Enterprises Ltd (ASX: DMP) has seen its short interest fall slightly week-on-week to 14.9%. Although the pizza chain operator released a soft result last week, its shares have rallied notably higher since. Short sellers may start closing positions in a hurry.
- Inghams Group Ltd (ASX: ING) has 13.1% of its shares held short, flat week-on-week. Investors may expect the poultry company to come under pressure from higher feed costs caused by the droughts in NSW.
- Metcash Limited (ASX: MTS) has seen its short interest rise slightly to 11.9%. Short interest spiked when the company warned shareholders of the loss of the Drakes SA supply contract in May.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat at 11.5%. Short sellers don't appear to believe the department store operator's turnaround plan is going to be a success.
- Vocus Group Ltd (ASX: VOC) has seen its short interest slide to 10.7%. Later this week the telco company is due to release its full-year results and it looks as though short sellers expect a weak result.
- Harvey Norman Holdings Limited (ASX: HVN) has climbed back into the top ten with short interest of 10.3%. Increased competition and a cooling housing market appear to be behind the rise.
