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.
I do this because 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 according to ASIC:
- Inghams Group Ltd (ASX: ING) is now the most shorted share on the ASX with short interest of 17.5%, which is up week on week. Concerns over increasing input costs and weaker margins due to the droughts are largely to blame for the high level of short interest.
- Syrah Resources Ltd (ASX: SYR) has experienced a reasonable decline in its short interest, down to 17.4%. Some short sellers may believe the graphite miner's shares have bottomed now after being sold off again last month.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest increase again, this time to 16.4%. Short sellers have been targeting Galaxy due to a sharp decline in lithium prices following a fall in demand and an increase in supply.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest ease to 15.8%. Short sellers appear to believe that weak consumer sentiment and a downturn in the housing market could be negatively impacting its JB Hi-Fi and The Good Guys businesses.
- Nufarm Limited (ASX: NUF) has leapt into the top ten with short interest of 13.1%. Last week the crop protection and seed specialist company had short interest of 7.7%, which may mean that a major short seller has taken an interest after its disappointing half year update.
- NEXTDC Limited (ASX: NXT) has short interest of 12.9%, which is up week on week. Short sellers appear to be targeting the data centre operator's shares due to the sky high earnings multiple that they trade on.
- Orocobre Limited (ASX: ORE) has short interest of 12%, which is down again week on week. Orocobre is another lithium miner that has come under pressure since the price of the battery making ingredient crashed lower.
- Metcash Limited (ASX: MTS) has 11.8% of its shares in the hands of short sellers, which is up on last week's numbers. An increase in competition in the supermarket industry and the loss of a major supply contract could be behind this heightened short interest.
- BWX Ltd (ASX: BWX) has seen its short interest rise slightly again to 11.6%. Weakening sales of its key Sukin skincare range looks to have caught the eye of short sellers.
- Bellamy's Australia Ltd (ASX: BAL) has entered the top ten with an increase in short interest to 10.8%. The infant formula company's shares have been on fire this year and some investors may feel they have run too hard.
