Why the most attacked ASX stock by short-sellers is under more pressure today

This stock has become the most shorted stock in the past month but there's a new reason to be bearish on this ASX company.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Inghams Group Ltd (ASX: ING) share price has fallen in morning trade after the poultry supplier was forced to recall a line of products due to contamination.

The Inghams share price fell 1% to $4.44 compared to a 0.8% decline in the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index as worries about a trade war between US and China drag on global equity markets.

Inghams has worries of its own. The New South Wales Food Authority issued an urgent message to consumers to check the date of any Inghams Sweet Chili Chicken Kiev bought from Woolworths Group Ltd (ASX: WOW), according to News.com.au.

Bad news is good news to some

The product bought between 19 and 21 May could have plastic bits that can be a choking hazard to consumers.

The only ones that would be happy about the news are short-sellers as Inghams shares are most targeted stock on the ASX over the past month.

Short-sellers are those who borrow stock to sell on-market in the hope of buying it back at a lower price later. It's a way to profit from falling stock prices.

The proportion of shares that have been lent out to short-sellers (called short interest) surged a whopping 10.1 percentage points to 17.2% of its total shares on issue, according to the latest data from ASIC, which is always a week behind.

This is the biggest increase of all ASX stocks and Inghams is now the most shorted stock on our market.

Short-sellers stepping up their attack

To put this in perspective, the stock that recorded a second highest increase in short-interest is JB Hi-Fi Limited (ASX: JBH) with a 3.6 percentage point increase to 15.3%.

The data from ASIC is up to 17 May and doesn't take the federal election results into account. I suspect short-sellers have cut their bearish positions in the electrical and white goods retailer since the shock re-election of the Liberal-National Coalition, which wants to cut income taxes more aggressively (and that's good for consumer spending).

The stock with the third largest increase in short-interest is online jobs site SEEK Limited (ASX: SEK). The SEK share price has performed strongly recently after it gave a market update and announced a big investment in its online training platform.

Some bearish investors aren't taken with the stock due to growing macroeconomic headwinds and concerns that the investment could take longer than expected to pay off.

Motley Fool contributor Brendon Lau owns shares of Woolworths Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Qantas, Resimac, Tyro, and Soul Patts shares are falling today

These shares are having a tough session today. But why?

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why Betr, Evolution, NIB, and West African Resources shares are falling today

These shares are having a tough time on hump day. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Elders, IDP Education, Life360, and Pilbara Minerals shares are falling today

Let's see why investors are selling these shares.

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Share Fallers

The 5 worst performing ASX 200 shares in May unmasked

These five ASX 200 shares got smashed in May. But why?

Read more »

Disappointed man with his head on his hand looking at a falling share price his a laptop.
Share Fallers

Why Brazilian Rare Earths, Mineral Resources, Pilbara Minerals, and Syrah shares are falling

Why are these shares starting the week in the red?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Brainchip, Findi, Lottery Corp, and REA shares are falling today

These shares are ending the week in the red. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why ALS, Black Cat, Boss Energy, and Soul Patts shares are falling today

These shares are falling on Thursday. Let's find out why.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why ALS, Fisher & Paykel Healthcare, IPD, and Predictive Discovery shares are falling today

These shares are having a tough time on hump day. But why?

Read more »