Short sellers are actively lifting their bets against these ASX companies

If short sellers, professional investors, and hedge funds are actively betting on share prices falling in companies that you own, it's worth paying attention. Of course the professionals naysayers might be wrong, but it's still worth at least knowing why some are heavily betting against these companies. 

The below data looks at businesses in the S&P/ASX 200 (ASX: XJO) that had the largest amount of short bets lifted against them (as a percentage of shares outstanding) over the two weeks to August 28. All data is taken from FactSet and ASIC, and we will look at the top 10, starting with the biggest percentage increases. 

The top 10 

Flight Centre (ASX: FLT) short interest increased to 10.6% vs 5.4% - the travel group has significant interests in the corporate and leisure travel sector across the UK and US, which are both on the nose for different reasons. Short sellers are betting Flight Centre has more bad news to deliver to investors ahead. 

IPH Ltd (ASX: IPH) short interest increased to 5.3% vs 2.2% - this is the legal services firm that handles intellectual property work across a number of different law brands. At its recent profit report, it warned of a drop in patent filings in the US and Australia, and short sellers may think this trend continues. 

Domino's Pizza (ASX: DMP) short interest increased to 9.3% vs 7% - the pizza franchisor and store owner posted disappointing results for the six months to June 30. It's battling cost inflation and cost-of-living pressure on its lower-income customer base. Management has also flagged it's suffered from not being on aggregator apps such as Uber Eats or Menulog, and that it might have to join them at a significant additional cost. Before the apps, Domino's had a strong brand and online presence, but that's all been hollowed out. 

Inghams Group (ASX: ING) short interest increased to 2.5% vs 0.9% - the chicken merchant is a regular target of short sellers and tumbled around 20% when its full year results missed the market's expectations on lower profits and flat sales. The company also has significant debt of more than $1 billion, so there are a few reasons why short sellers may not be impressed. 

Reliance Worldwide Corp (ASX: RWC) short interest increased to 2.5% vs 0.9% - the plumbing parts business had an infamous earnings call over profit reporting season, where it flagged tough conditions in its core US market. Short sellers will expect this to continue and have upped their bets on more share price falls in August. 

Guzman y Gomez (ASX: GYG) short interest increased to 9% vs 8% - the burritos merchant has traded on a high profit multiple that demands strong growth that it did not deliver over the six months to June 30. Its US business struggled and the high-growth expectations in Australia are demanding to meet. All this is prompting short sellers to bet against it. 

Telix Pharmaceuticals (ASX: TLX) short interest increased to 6.1% vs 5.1% - this biotech business has run into some problems with the tough US healthcare regulator the FDA. Once a market darling, it's lost a lot of shine as the stock has collapsed in half over the last six months to $14.28 on Wednesday. These kinds of businesses can be volatile, so given the rising short interest, shareholders should strap in. 

Megaport (ASX: MP1) short interest increased to 3.2% vs 2.3% - this internet connectivity and data centre business has always traded on a high valuation and divided opinion on its potential to turn big capital expenditures into profits. Short sellers are probably betting against the valuation and will feel good today, with the stock off 4.3%. 

Clarity Pharmaceuticals (ASX: CU6) short interest increased to 3.2% vs 2.3% - this is a pre-revenue biotech seeking to develop treatments for different forms of cancer via targeted radiotherapies. It's likely to deliver quite binary outcomes over the future, as it could rocket higher, or head downhill faster than an Austrian skier. This one is impossible to call given the complex science and uncertainties to navigate. 

Emerald Resources (ASX: EMR) short interest increased to 3.8% vs 3.1% - this is a Cambodia-based gold miner I must admit to knowing nothing about. Cambodia is a high-risk jurisdiction and the company last updated the market with its earnings on August 27. Shares are up 15.8% over the last month and with the rising gold price short sellers might be sitting on losses.