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Ashland’s Short Interest Continues to Rise

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Ashland’s short interest

The May 18 data show that Ashland’s (ASH) short interest has stayed high with small variations since the middle of February, indicating that the bears are fairly active and are likely have negative sentiments toward the stock.

At the same time, the stock is also trading at an all-time high, and it appears that the bears see an opportunity here. As of May 18, ASH’s short interest as a percentage of its outstanding shares was 5.6% compared to 3.6% on January 12. During this period, its stock price rose from $74.12 to $77.75.

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Ashland’s short interest increased in the middle of February. The primary reason for this increase could be the breakdown in the merger talks between Ashland and Britain-based Croda International. It’s believed that since the separation of Valvoline, many view ASH as a potential target for takeover. Further, the stock’s trading at an all-time high and a 14-day relative strength index of 75 indicates that it’s been overbought and there could be selling pressure. Such pressure could push its short interest up.

Short interest ratios for Ashland and its peers

On May 18, Ashland’s short interest was 3.5 million shares, and its average trading volume was 0.85 million shares, implying a short interest ratio of 4.1x. This ratio indicates that it would require approximately four days to cover all the stock’s short positions. Let’s look at the short interest ratios of its peers:

  • Celanese’s (CE) short interest was 1.3 million shares, and its average number of shares traded was 0.91 million, meaning its short interest ratio was 1.45x. It would take one day to cover all its short positions.
  • Eastman Chemical’s (EMN) short interest was 4.5 million shares, and its average number of shares traded was 1.1 million, meaning it would take four days to cover all its short positions.
  • DowDuPont’s (DWDP) short interest ratio was 2.4x, which means it would take nearly two days to cover all its short positions.

The iShares S&P Mid-Cap 400 Value ETF (IJJ) provides an opportunity for investors to indirectly hold Ashland. The fund has invested 0.6% of its portfolio in Ashland.

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