The latest short sale data provided by the ASX shows Boral is under siege from short sellers. Yesterday’s data showed 1,649,458 shares sold short, a massive 40.72% of sales on Thursday. This continues a pattern which should be of concern to Boral longs, with 60%, 52%, 33% and 59% of sales sold short over the four prior days.

Are the shorts on to something?

The current P/E of 25 appears an expensive price tag for a company with limited prospects. 2010 consensus forecast of 23.2c give a forward P/E of 24.2 and 2011 eps of 31.4c still leaving Boral with an uncomfortably high 17.9 P/E.

Even if Boral return to their peak profitability the current share price has little upside and the miserly 2.3% dividend yield isn’t enticing.

With total debt of $1.6B and a quick ratio of 1.04 Boral is not in a position of strength. From my quick look it appears Boral is overvalued and the shares appears to have topped. I use high short sale data as a warning flag to closely examine my positions, that’s something Boral longs may wish to do. This presentation to analysts in the US is a good place to start.

Disclosure: No position in Boral.

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