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Why Short Interest in PPG Industries Is on the Rise

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PPG Industries’ short interest

The latest short interest data from July 31 indicate that PPG Industries’ (PPG) short interest has been increasing since the beginning of 2018. This movement suggests that bearish sentiments in the stock have increased.

As per the latest report, PPG’s short interest as a percentage of its outstanding shares was 3.5% on July 31, up from 2.6% on January 12. From January 12 to July 31, the stock fell from $118.17 to $110.66.

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So far in 2018, PPG Industries has beaten earnings estimates once and missed estimates once. Analysts are worried about the continued rise in raw materials prices, which is affecting PPG’s margins. Though PPG has taken measures to pass on the raw materials price increases to its customers, it remains to be seen what results this strategy will yield in the coming quarters.

The continued trade war between China and the United States, which is creating some volatility in the market, has also had an adverse impact on the stock. As a result, we can see the increasing trend in its short interest.

Short interest ratios

In terms of its number of shares, PPG’s short interest was 8.4 million. Its average trading volume is 1.66 million shares, which means it has a short interest ratio of 5.08x. The ratio indicates that it would take five days to cover all the stock’s short positions.

Now let’s take a look at the short interest ratios of PPG’s peers:

  • Sherwin-Williams (SHW) has a short interest of 2.1 million shares. Its average number of shares traded is 0.66 million. Its short interest ratio is 3.2x, which indicates that it will take three days to cover all of its short positions.
  • RPM International’s (RPM) short interest is 4.5 million, while its average number of shares traded is 1.37 million. Its short interest ratio indicates that it will take three days to cover all of its short positions.
  • Axalta’s (AXTA) short interest ratio suggests that it will take four days to cover all of its short positions.

Investors can hold PPG Industries indirectly by investing in the Invesco DWA Basic Materials Momentum ETF (PYZ). PYZ has invested 2.3% of its portfolio in PPG Industries as of August 16.

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