uploads/2018/03/Part-3-LyondellBasell-Short-interest-1.png

LyondellBasell’s Short Interest Has Fallen in 2018—Why?

By

Updated

LyondellBasell’s short interest

A February 28, 2018, short interest report shows that LyondellBasell’s (LYB) short interest has fallen since the beginning of 2018. On December 28, 2017, LYB’s short interest as a percentage of its outstanding shares stood at 2.7%. Its short interest had fallen to 2.5% as of February 27, 2018.

However, LYB’s short interest was 0.4 percentage points higher than it was in the previous report, indicating that it could rise again due to volatility in the stock market on account of trade wars and political tensions.

Article continues below advertisement

Why LYB’s short interest fell

LyondellBasell reported strong 4Q17 earnings, and it’s poised to continue this positive momentum in the upcoming quarters. At the same time, LYB is set to acquire Schulman in an all-cash deal for $2.3 billion. LYB has also completed its acquisition of Quality Circular Polymers in a joint venture with SUEZ. These positive developments have resulted in a fall in the stock’s short interest.

LyondellBasell’s short interest compared to its peers’

LYB’s short interest is ~10.0 million shares, and its average trading volume is ~2.2 million shares. As a result, its interest ratio is 4.5x, which indicates that it would take five days to cover all of the short positions in its stock. Below are the short interest ratios of LYB’s peers:

  • Olin’s (OLN) short interest is ~2.4 million shares, while its average number of shares traded is 2.3 million. Its short interest ratio is ~1.05x, which indicates that it would take just one day to cover its short positions.
  • Celanese’s (CE) short interest ratio is 2.0x, which means that it would take two days to cover its short positions.
  • Westlake Chemical’s (WLK) short interest ratio is 4.8x, which means that it would take five days to cover its short positions.

Investors can indirectly hold LYB by investing in the Vanguard Materials ETF (VAW), which invested 4.0% of its portfolio in the stock as of March 23, 2018.

Advertisement

More From Market Realist