At the start of each week I like to look at ASIC's short position report in order 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 a sign that something isn't quite right with a company.
With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:
- Galaxy Resources Limited (ASX: GXY) is once again the most shorted share on the ASX despite another decline in short interest to 16.4%. Galaxy owns and operates some world class lithium operations. However, a sharp decline in lithium prices due to an oversupply of the battery making ingredient is weighing heavily on margins.
- Speedcast International Ltd (ASX: SDA) has short interest of 13.2%, which is flat week on week. The communications satellite technology provider's shares remain suspended whilst it sorts out a funding deal to secure its future. Speedcast's shares have been suspended from trade since the start of February.
- Orocobre Limited (ASX: ORE) has seen its short interest edge lower to 13%. Orocobre is another lithium miner which is being negatively impacted by a collapse in the price of the white metal.
- Webjet Limited (ASX: WEB) has leapt into the top ten with short interest of 11.25%. Although the online travel agent has just raised capital to support it through the coronavirus crisis, some short sellers remain bearish on its prospects.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest rebound to 10.7%. Short sellers may believe the pandemic and housing market weakness will weigh on its performance in the near term.
- Inghams Group Ltd (ASX: ING) has short interest of 10.3%, which is down week on week once again. Short sellers have been closing positions consistently over the last few weeks, possibly on the belief that the poultry company's prospects are improving due to more people eating at home.
- Myer Holdings Ltd (ASX: MYR) has seen its short interest lift to 10%. The closure of its department stores because of the pandemic looks likely to be a big blow to its recovery plans.
- Clinuvel Pharmaceuticals Limited (ASX: CUV) has seen its short interest rise to 9.5%. The biopharmaceutical company's shares appear to have come under pressure due to valuation reasons. Clinuvel's shares trade at a significant premium to the market average.
- Pilbara Mineral Ltd (ASX: PLS) has short interest of 9.4%, which is flat week on week. Pilbara Minerals is another lithium miner being targeted due to weakening lithium prices.
- Flight Centre Travel Group Ltd (ASX: FLT) has entered the top ten with short interest of 9.4%. Like Webjet, Flight Centre has just raised funds to support it through the pandemic. But short sellers appear to believe the hard times are a long way from being over.
