At the start of each week I like to look at ASIC's short position report to find out which shares are being targeted by short sellers.
Whilst it is worth noting that short sellers don't always get it right, there have been a number of high profile success stories over the last 12 months that I believe demonstrate why it is well worth keeping a close eye on short interest levels.
These are the 10 most shorted shares on the ASX this week:
- Syrah Resources Ltd (ASX: SYR) is the most shorted share on the ASX once again with short interest rising to 21%. Short sellers appear to have increased their positions after the graphite miner downgraded its full-year production guidance and advised that it had sold just 72% of its produce during the last quarter.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rise to 19.2%. Unfortunately for short sellers, the retailer's shares are up almost 10% since this time last week.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest rise again to 17.7%. Short sellers continue to target the lithium miners due to concerns about future lithium prices.
- Orocobre Limited (ASX: ORE) is another lithium miner with high levels of short interest. Orocobre has 15.8% of its shares held short, which is flat on last week.
- Domino's Pizza Enterprises Ltd (ASX: DMP) has seen its short interest rise week-on-week to 15.2%. Short sellers don't appear to be giving up on Domino's despite most brokers agreeing that the pizza chain operator is over the worst of it now.
- Metcash Limited (ASX: MTS) has seen its short interest rise sharply to 12.8%. The loss of the Drakes SA supply contract in May appears to have many in the market concerned that it may be one of many future supply contract losses that could create a large gap in its earnings.
- Inghams Group Ltd (ASX: ING) has 12.8% of its shares held short, down slightly week-on-week. Investors may believe the poultry company could see its margins come under pressure from higher feed costs caused by the droughts in NSW.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest rise slightly to 11.6%. I suspect the market has doubts over the success of the department store operator's turnaround plans.
- Vocus Group Ltd (ASX: VOC) has seen its short interest slide to 10.4%. Last week Vocus' shares rose strongly after TPG Telecom Ltd (ASX: TPG) announced that it was looking to merge with a Vodafone Australia. Investors believe this could be an end of the telco industry price war.
- Harvey Norman Holdings Limited (ASX: HVN) has short interest of 10%, down notably from a week earlier. A recent spike it the retailer's share price appears to have spooked some short sellers.
