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Has BHI’s Short Interest Decreased since 1Q16?

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Jul. 12 2016, Updated 9:07 p.m. ET

Baker Hughes’s short interest

On July 7, 2016, Baker Hughes’s (BHI) short interest as a percentage of its float was 1.0%, compared to 1.2% on March 31. Since the end of 1Q16, BHI’s short interest has decreased by 17%.

As noted in the graph below, BHI’s share price and short interest as percentage of float have been inversely related in the past three years. Baker Hughes comprises 0.03% of the iShares Core Growth Allocation ETF (AOR). Equity assets make up 60% of AOR, and fixed income assets make up 39% of AOR.

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Short interest and share price

Short interest is the number of shares sold short, divided by the number of outstanding shares. A decline in short interest as a percentage of float, or a fall in short interest, indicates that fewer investors expect the stock’s price to fall.

Despite the fall in short interest, BHI’s stock price has remained nearly unchanged since March 31. Since March 31, BHI’s smaller market cap peer McDermott International’s (MDR) share price has risen by 17%.

However, investors should note that the market could go against investors’ sentiments. Also, the share price could increase when investors start buying the stock to cover their short positions.

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