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Once a week 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 well 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:
- Flight Centre Travel Group Ltd (ASX: FLT) remains the most shorted ASX share despite its short interest easing to 11.8%. Valuation concerns appear to be the reason for this high level of short interest. For example, Citi estimates that its shares are changing hands for 32x FY 2023 earnings.
- Kogan.com Ltd (ASX: KGN) has seen its short interest rise week on week again to 11.4%. This ecommerce company's slowing growth and inventory issues have been weighing on sentiment.
- Redbubble Ltd (ASX: RBL) has short interest of 10.4%, which is flat week on week. This ecommerce company's shares have come under significant pressure since the release of a disappointing quarterly update.
- Zip Co Ltd (ASX: Z1P) has seen its short interest rise to 9%. Short sellers appear concerned over the costs involved with this buy now pay later provider's global expansion and also with increasing competition.
- Webjet Limited (ASX: WEB) has short interest of 8.9%, which is down slightly week on week. As with Flight Centre, valuation concerns appear to be behind this high level of short interest. Citi estimates that Webjet's shares are trading at almost 38x FY 2023 earnings.
- Mesoblast limited (ASX: MSB) has short interest of 8.8%, which is flat week on week. Due to its ongoing cash burn, there are concerns that this biotech company will soon have to raise funds again.
- Electro Optic Systems Hldg Ltd (ASX: EOS) has 8.7% of its shares held short, which is up week on week once again. Short positions have increased since the defence and space company downgraded its earnings guidance.
- Inghams Group Ltd (ASX: ING) has 8.4% of its shares held short, which is up week on week. This poultry producer recently confirmed that it was being impacted by higher grain costs.
- Cooper Energy Ltd (ASX: COE) has 8.2% of its shares held short, which is up week on week once again. Concerns over the Sole Gas operation continue to weigh on sentiment.
- A2 Milk Company Ltd (ASX: A2M) has returned to the top with short interest of 7%. Short sellers have been increasing their positions since A2 Milk's disappointing strategy update. That update revealed a challenging medium term outlook.
