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At the start of each 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:
- Pilbara Minerals Ltd (ASX: PLS) remains far and away the most shorted ASX share with 21.8% of its shares held short. This is down slightly week on week. It appears that short sellers are not expecting lithium prices to recover any time soon.
- IDP Education Ltd (ASX: IEL) has 17.1% of its shares held short, which is up week on week once again. There are concerns that this language testing and student placement company could struggle with changes to student visa rules in a number of key markets. In addition, the loss of its language testing monopoly in Canada has been a blow.
- Syrah Resources Ltd (ASX: SYR) has short interest of 12.8%, which is down slightly week on week again. This graphite miner's shares have lost half of their value over the last 12 months amid weak battery materials prices, production suspensions, and further cash burn.
- Flight Centre Travel Group Ltd (ASX: FLT) has seen its short interest fall week on week to 10.7%. Short sellers appear to believe the market is too optimistic on revenue margins and travel spending.
- Australian Clinical Labs Ltd (ASX: ACL) has short interest of 9.9%. This may have been driven by the health imaging company guiding to another sharp decline in its earnings in FY 2024.
- Liontown Resources Ltd (ASX: LTR) also has 9.9% of its share held short, which is flat week on week. Some analysts believe that lithium prices will stay at low levels for years.
- Westgold Resources Ltd (ASX: WGX) has short interest of 9.4%, which is now up for a fourth week in a row. This may be due to concerns over the gold miner's proposed merger with Canada-based Karoa Resources.
- Sayona Mining Ltd (ASX: SYA) has short interest of 9.4%, which is up week on week again. Short sellers have targeted this lithium miner because of weak lithium prices. In fact, prices are so low that it costs Sayona Mining more to produce its lithium than it receives for it.
- Chalice Mining Ltd (ASX: CHN) has short interest of 8.4%, which is up week on week again. Short sellers don't appear to be put off by the favourable Federal Budget.
- Healius Ltd (ASX: HLS) is a new entry in the top ten with short interest of 8%. Short sellers appear to have noted tough trading conditions, the exit of its CEO, and a precarious balance sheet.
