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Honeywell’s Short Interest the Lowest in 2018: What That Suggests

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Honeywell’s short interest

Short interest data from April 30 show that Honeywell’s short interest has fallen to its lowest level in 2018, indicating the prevailing positive sentiments for the stock. As of April 30, its short interest as a percentage of outstanding shares was 0.9%, compared to 1.3% on January 12. However, during that period, the stock fell from $159.07 to $144.68.

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Why HON’s short interest declined

The decline in HON’s short interest can be mainly attributed to its strong first-quarter earnings that beat analysts’ estimates. HON also upgraded its fiscal 2018 earnings guidance to $7.85–$8.05 compared to the earlier guidance of $7.75–$8. Other positive developments include continued growth in its UOP (Universal Oil Products) and aviation businesses. The intended spin-offs are expected to go according to plan. HON’s short interest has been the best in its peer group.

Short interest ratio for Honeywell and its peers

On April 30, Honeywell’s short interest was ~6.8 million shares, and its average trading volume was ~2.9 million shares, meaning a short interest ratio of ~2.4x. That figure indicates that it would require approximately two days to cover all its short positions. Below are the short interest ratios for its peers.

  • United Technologies’ (UTX) short interest was 15 million shares, and its average number of shares traded was 4.5 million, meaning a short interest ratio of ~4.3x. It would take more than four days to cover all its short positions.
  • Textron’s (TXT) short interest was ~6.3 million shares, and its average number of shares traded was ~1.9 million, meaning it would take three days to cover all its short positions.
  • Caterpillar’s (CAT) short interest ratio was ~1.8x, meaning it would take nearly two days to cover all its short positions.

Investors can indirectly hold Honeywell through the iShares Edge MSCI Multifactor Industrials ETF (INDF), which had 2.7% of its portfolio invested in HON as of May 16.

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