These are the 10 most shorted ASX shares

Once a week, I like to look at ASIC's short position report to find out which ASX shares are being targeted by short sellers.

That's because I believe it is worth keeping a close eye on short interest levels, as high levels can sometimes indicate that investors have concerns about a company's outlook.

With that in mind, listed below are the 10 most shorted shares on the ASX this week according to ASIC.

The top 10 most shorted ASX shares

• DroneShield Ltd (ASX: DRO) remains the most shorted ASX share despite its short interest easing to 15.9%. The counter-drone technology company's ambitious growth expectations and ongoing ASIC investigation into previous market disclosures and share trading may be continuing to attract attention from short sellers.
• Lotus Resources Ltd (ASX: LOT) has seen its short interest increase slightly to 15.8%. The uranium producer is working to ramp up production at its Kayelekera mine in Malawi. Short sellers may be questioning whether the operation can consistently achieve its production targets and generate attractive returns after the challenges encountered during its restart.
• Boss Energy Ltd (ASX: BOE) has short interest of 14.9%, down from 15.1% last week. The company's updated feasibility study has outlined a pathway for its Honeymoon uranium operation, but investors may be waiting for evidence that the revised mining approach can deliver the expected production volumes and operating costs.
• PLS Group Ltd (ASX: PLS) has moved higher up the table with short interest increasing to 13.6%. The lithium miner recently approved its $1.9 billion P2000 expansion project at Pilgangoora. Short sellers may be concerned about the significant investment required, particularly with uncertainty surrounding lithium prices and the potential for excess supply in 2027.
• Glencore plc (ASX: GLC) is a new addition to the list with reported short interest of 13.4%. The global mining and commodities trading giant only began trading on the ASX on 14 October. It is possible that its international listings mean the elevated Australian short position could partly reflect trading and hedging activity across different markets.
• Zip Co Ltd (ASX: ZIP) has seen its short interest climb to 13.3%. Short sellers may have been concerned about the buy now, pay later provider's US operations, particularly credit losses and the sustainability of customer growth. Last week, Zip revealed a US fraud incident that affected transaction volumes and added to operating expenses.
• Paladin Energy Ltd (ASX: PDN) has short interest of 13.2%, up sharply from 11.8% last week. Its latest quarterly update revealed uranium production of 1 million pounds at the Langer Heinrich mine, down from 1.23 million pounds in the previous quarter. Production costs also increased, potentially reinforcing concerns about the operation's ability to deliver a sustained improvement in output and profitability.
• IperionX Ltd (ASX: IPX) has seen its short interest ease to 12.5%. Although the company is progressing its plans to establish a major US titanium production business, short sellers may be questioning how quickly it can increase manufacturing output, secure commercial orders, and translate its technological progress into sustainable earnings.
• Lynas Rare Earths Ltd (ASX: LYC) has short interest of 12%, up slightly from 11.8%. The rare earths producer recently announced plans to acquire Meteoric Resources Ltd (ASX: MEI), giving it exposure to the Caldeira project in Brazil. The cost and complexity of developing another major operation, alongside uncertainty surrounding rare earth prices, could be attracting short sellers.
• Electro Optic Systems Holdings Ltd (ASX: EOS) has entered the top ten with short interest of 11.1%. The defence technology company recently announced a $700 million contract to provide a nationwide counter-drone defence system for Kuwait. However, the agreement remains subject to several conditions, and short sellers may be wondering whether the company can successfully deliver such a substantial project.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. 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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