Every Monday I like to look at ASIC's short position report to find out which shares are being targeted by short sellers.
This is because I believe it is worth keeping a close eye on short interest levels as high levels can sometimes be an indication 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:
- Galaxy Resources Limited (ASX: GXY) has become the most shorted share on the ASX with short interest of 17.1%. Short sellers have been targeting Galaxy following a sharp decline in lithium prices over the last 12 months.
- Syrah Resources Ltd (ASX: SYR) has short interest of 16.3%, down materially week on week. Short sellers may have been closing positions after the graphite miner released a stronger than expected first quarter update.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest slide week on week to 15.4%. There are concerns that the JB Hi-Fi and The Good Guys businesses could be struggling due to weak consumer sentiment and the housing market downturn.
- Inghams Group Ltd (ASX: ING) has seen its short interest reduce materially to 15.2%. The poultry producer had been targeted due to concerns over increasing input costs and weaker margins because of the droughts.
- Nufarm Limited (ASX: NUF) has seen its short interest increase week on week to 14.4%. Short sellers appear to have been topping up their positions after the crop protection and specialist seed company's disappointing half year results last month.
- NEXTDC Limited (ASX: NXT) has short interest of 14.1%, which is up notably week on week. The data centre operator's shares appear to have been targeted due to their premium valuation. Short sellers may not believe NEXTDC's earnings growth will justify the multiples its shares trade on.
- Bellamy's Australia Ltd (ASX: BAL) has short interest of 11.8%, up materially week on week. After a strong run since the start of the year, short sellers may believe that the infant formula company's shares have run too hard. Last week Citi downgraded its shares on valuation grounds.
- Metcash Limited (ASX: MTS) has 11.7% of its shares in the hands of short sellers, which is down week on week. Short sellers may believe that increasing competition from Aldi, Lidl, and Kaufland could hurt Metcash more than the big two supermarkets.
- Orocobre Limited (ASX: ORE) has short interest of 11.6%, which is down week on week. Like Galaxy, this lithium miner has come under pressure since the price of the battery making ingredient sank lower over the last 12 months.
- BWX Ltd (ASX: BWX) has seen its short interest ease to 11.2%. Short sellers don't appear to believe that the company behind the Sukin skincare brand is over the worst of its issues yet.
