Every Monday I like to take a look at ASIC's short position report to find out which shares have been targeted by short sellers.
The reason for this is that I think it is worth keeping an eye on short interest levels as high levels can sometimes be a sign that something isn't quite right.
With that in mind, here are the 10 most shorted shares on the ASX this week:
- JB Hi-Fi Limited (ASX: JBH) remains the most shorted share on the ASX with 17.9% of its shares held short, up slightly since last week. Short sellers appear to believe that this retail giant is going to suffer from increasing competition online.
- Syrah Resources Ltd (ASX: SYR) has seen its short interest rise week on week again to 17.2%. Although the graphite miner recently announced a new offtake agreement, no pricing terms were provided. This has increased concerns that Syrah may be selling its graphite at lower than expected prices.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest slide slightly to 17%. This lithium miner's shares came under significant selling pressure this month after one of its rivals reported a sharp drop in the price of its lithium carbonate.
- Orocobre Limited (ASX: ORE) has short interest of 13.7%, down slightly week on week. Orocobre is the lithium miner which reported a sharp decline in its lithium carbonate prices earlier this month. Lower demand was blamed for the drop.
- Inghams Group Ltd (ASX: ING) has 13.5% of its shares held short, up again week-on-week. There are concerns that the droughts could raise feed costs and impact the poultry company's margins.
- Metcash Limited (ASX: MTS) has 13.1% of its shares in the hands of short sellers, up slightly since last week. Metcash shares have been targeted following the loss of a major supply contract and the rise of Aldi in Australia.
- BWX Ltd (ASX: BWX) has seen its short interest fall to 12.8%. This personal care products company's shares were smashed earlier this month after a surprise downgrade to its earnings guidance for FY 2019 just seven weeks after confirming it. BWX's shares rose strongly on Friday, possibly indicating that investors think they have bottomed.
- InvoCare Limited (ASX: IVC) has 12.3% of its shares held short, up again since last week. InvoCare's shares have come under pressure due to tough trading conditions in the funeral industry.
- NEXTDC Ltd (ASX: NXT) has 12.1% of its shares held short, up slightly week on week. This data centre operator's shares are trading on a nosebleed valuation, which some investors appear to believe is too rich.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat at 11.8%. Short sellers may be expecting Myer to have had a disappointing Christmas period.
