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.
I think it is worth keeping a close eye on short interest levels because high levels can sometimes be a sign that something isn't quite right.
Here are the 10 most shorted shares on the ASX this week:
- JB Hi-Fi Limited (ASX: JBH) continues to be the most shorted share on the ASX with 19.8% of its shares held short. Much to the disappointment of short sellers, last week JB Hi-Fi released a reasonably upbeat trading update at its AGM.
- Orocobre Limited (ASX: ORE) has short interest of 16.7%, up slightly since last week. As well as being subjected to a new export tax in Argentina, short sellers appear to believe that Orocobre will see its margins narrow from falling lithium prices.
- Galaxy Resources Limited (ASX: GXY) is another lithium miner being targeted by short sellers. It has short interest of 15.9%, down from 16.5% last week. Disappointing production in the last quarter has weighed on sentiment along with concerns over future lithium prices.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest fall to 15.6%. An endless number of issues have disrupted production at its massive graphite project this year leading to several production guidance downgrades.
- Inghams Group Ltd (ASX: ING) has 13.2% of its shares held short, which is flat on last week. Short interest has remained the same despite the poultry company naming a new CEO this month.
- BWX Ltd (ASX: BWX) has seen its short interest edge higher to 12.6%. Although the personal care company's shares have fallen heavily this year, short sellers appear to believe they can fall further. I suspect there are concerns that recent acquisitions are failing and Sukin's sales are softening.
- Metcash Limited (ASX: MTS) has 12.4% of its shares held short, down slightly since last week. Short sellers have been targeting the wholesaler due to increasing competition from the likes of Aldi and also the loss of a major supply contract in South Australia.
- Domino's Pizza Enterprises Ltd (ASX: DMP) has continued to see its short interest fall. The pizza chain operator now has just under 12% of its shares held short, which I think could be a sign that short sellers are closing positions in an orderly manner.
- InvoCare Limited (ASX: IVC) now has 11.3% of its shares held short, up from 10.9% last week. I think that short sellers have begun targeting the funeral company due to its low growth prospects and premium valuation.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest reduce slightly to 11.15%. Although short sellers don't appear confident on Myer's prospects, insiders seem to be more confident. Several directors have bought shares on-market this month.
