Once in a while it's worth taking a look at what shares on the S&P/ ASX200 (ASX: XJO) professional investors and hedge funds most commonly expect to fall in value. For example if a company has more than 10% of its outstanding shares shorted that's a pretty high amount and suggests some traders think the shares are due a fall.
They could be wrong though and about to front some heavy losses – as no one knows which way a stock may swing.
For example in March 2018 software-as-a-service business Aconex was heavily shorted by 'professional' investors when U.S. tech giant Oracle made a takeover bid for it at a 47% premium to the then share price.
So with this in mind let's take a look at five companies currently being heavily bet against. All short data according to ASIC as at 16 July 2019.
Domino's Pizza Enterprises Ltd. (ASX: DMP) has 11.3% of its stock shorted with the original U.S. business last week reporting softer-than-expected same store sales growth. Analysts blamed this partly on the rise of aggregated takeaway menu and delivery platforms such as UberEats or Grubhub. This might be something short sellers in Australia are pondering.
Harvey Norman Holdings Limited (ASX: HVN) is the furniture store franchisor mainly operating out of Australia. Short sellers are probably betting falling house prices and listings will translate into weaker-than-expected bottom line results for Harvey Norman.
Hub24 Ltd (ASX: HUB) is the investment platform provider that has 9.9% of its shares shorted. It just reported net inflows of $979 million for the quarter ending June 30 2019, but it seems some short sellers are unimpressed.
Metcash Limited (ASX: MTS) is the IGA store supplier and Mitre 10 hardware store operator, with 10.6% of its scrip shorted. Investors are probably betting the IGA store business is set to remain under pressure given the tough competition from the likes of Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Aldi.
NextDC Ltd (ASX: NXT) is the data centre operator with 14.6% of its scrip shorted, which suggests hedge funds are betting its big capital expenditures on new data centres in Sydney and Melbourne won't pay off. It also trades on a relatively high multiple of profits.
