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What LyondellBasell’s Short Interest Suggests

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LyondellBasell’s short interest

As of April 12, LyondellBasell’s (LYB) short interest had fallen since the beginning of 2018. It has remained constant compared to its previous report. On December 29, 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 April 12, 2018. However, the stock price fell 6% during this time.

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Why did LYB’s short interest fall?

Global stock markets have been volatile due to the tussle over tariffs between the US and China and more Fed rate hikes in fiscal 2018 than expected. As a result, the stock price fell, but the positive sentiment remained. 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 complete its acquisition of A. Schulman (SHLM) in the second half of fiscal 2018, and it received US antitrust approval for the acquisition. LYB has also completed its acquisition of Quality Circular Polymers in a joint venture with SUEZ. The increase in crude oil prices is expected to improve the performance of the refinery segment. 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 ~9.7 million shares, and its average trading volume is ~2.5 million shares. As a result, its interest ratio is 3.9x, which indicates that it would take four 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 ~3.2 million shares, while its average number of shares traded is 2.3 million. Its short interest ratio is ~1.40x, which indicates that it would take just one day to cover its short positions.
  • Celanese’s (CE) short interest ratio is 2x, which means that it would take one day to cover its short positions.
  • Westlake Chemical’s (WLK) short interest ratio is 4.6x, 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 invests 3.8% of its portfolio in the stock as of April 20.

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