At the start of each week I like to look at ASIC’s short position report to find out which shares short sellers are targeting.
Short sellers will only tend to take on positions when they have a high conviction of success, which makes me extremely wary of shares with high levels of short interest.
According to data provided by ASIC, these are the 10 most shorted shares on the ASX this week:
- Syrah Resources Ltd (ASX: SYR) continues to be the most shorted share on the Australian share market with short interest of 21.6%, up sharply since last week. Short sellers are allegedly targeting Syrah due to graphite oversupply concerns.
- JB Hi-Fi Limited (ASX: JBH) has seen short interest jump to 16.8%. This may be down to fears that the housing market is cooling and that increasing online competition could weigh heavily on the retailer’s performance.
- Domino’s Pizza Enterprises Ltd. (ASX: DMP) has seen a sharp week-on-week reduction in short interest to 16.4%. A couple of positive broker notes released this month could have led to some short sellers closing positions.
- Galaxy Resources Limited (ASX: GXY) has 14.9% of its shares held short. The lithium miners continue to be targeted by short sellers due to concerns over the future prices of the battery making ingredient. Experts believe increased supply in Australia and Argentina will cause prices to halve in the next few years.
- Healthscope Ltd (ASX: HSO) has seen short interest rise again to 14.1%. Short sellers may want to be careful with this one. Last week there were rumours that the hospital operator was a target of private equity firms.
- Vocus Group Ltd (ASX: VOC) has seen another week-on-week rise in short interest to 12.2%. The telco company’s shares may be trading close to a multi-year low, but short sellers appear to believe they can still go lower.
- Independence Group NL (ASX: IGO) has seen its short interest remain steady at 11.9%. The gold and nickel miner has seen its short interest fall significantly over the last few months as investor sentiment improves.
- Nanosonics Ltd. (ASX: NAN) has seen its short interest rise to 11.7%. Short sellers may be targeting the infection control specialist due to the high multiples that its shares trade on. Positively, though, there was a spot of insider buying last week at Nanosonics.
- Myer Holdings Ltd (ASX: MYR) has short interest of 11.2%. Even though there have been rumours that David Jones is planning to launch a takeover bid, short interest levels have remained strong.
- Retail Food Group Limited (ASX: RFG) has climbed back into the top ten with short interest of 11.1%. Short sellers appear to believe the embattled food and beverage company’s shares can still fall lower despite dropping over 80% in 12 months.
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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited and Vocus Communications 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.