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.
I do this because I think it is worth keeping an eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right.
With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:
- Inghams Group Ltd (ASX: ING) is now the most shorted share on the ASX with short interest of 17.5%, which is up week on week. Concerns over increasing input costs and weaker margins due to the droughts are largely to blame for the high level of short interest.
- Syrah Resources Ltd (ASX: SYR) has experienced a reasonable decline in its short interest, down to 17.4%. Some short sellers may believe the graphite miner’s shares have bottomed now after being sold off again last month.
- Galaxy Resources Limited (ASX: GXY) has seen its short interest increase again, this time to 16.4%. Short sellers have been targeting Galaxy due to a sharp decline in lithium prices following a fall in demand and an increase in supply.
- JB Hi-Fi Limited (ASX: JBH) has seen its short interest ease to 15.8%. Short sellers appear to believe that weak consumer sentiment and a downturn in the housing market could be negatively impacting its JB Hi-Fi and The Good Guys businesses.
- Nufarm Limited (ASX: NUF) has leapt into the top ten with short interest of 13.1%. Last week the crop protection and seed specialist company had short interest of 7.7%, which may mean that a major short seller has taken an interest after its disappointing half year update.
- NEXTDC Limited (ASX: NXT) has short interest of 12.9%, which is up week on week. Short sellers appear to be targeting the data centre operator’s shares due to the sky high earnings multiple that they trade on.
- Orocobre Limited (ASX: ORE) has short interest of 12%, which is down again week on week. Orocobre is another lithium miner that has come under pressure since the price of the battery making ingredient crashed lower.
- Metcash Limited (ASX: MTS) has 11.8% of its shares in the hands of short sellers, which is up on last week’s numbers. An increase in competition in the supermarket industry and the loss of a major supply contract could be behind this heightened short interest.
- BWX Ltd (ASX: BWX) has seen its short interest rise slightly again to 11.6%. Weakening sales of its key Sukin skincare range looks to have caught the eye of short sellers.
- Bellamy’s Australia Ltd (ASX: BAL) has entered the top ten with an increase in short interest to 10.8%. The infant formula company’s shares have been on fire this year and some investors may feel they have run too hard.
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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited and NEXTDC Limited. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool Australia has recommended Bellamy’s Australia. 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.
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