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Analyzing Caterpillar’s Short Interest

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Caterpillar’s short interest

The latest short interest report on August 31 indicates that Caterpillar’s (CAT) short interest declined compared to its previous report two weeks ago.  So far, Caterpillar’s short interest has been 1%–2% in 2018. According to the latest report, Caterpillar’s short interest as a percentage of its outstanding shares stood at 1.55%.

The decline in the short interest suggests a reduction in the negative sentiments. However, Caterpillar’s short interest has been fluctuating lately due to the continued trade war between the US and China. Caterpillar managed to post strong earnings in the second quarter and beat analysts’ estimates. However, Caterpillar could attract more bears since it moved into an “overbought” position.

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Short interest ratio

In terms of the number of shares, Caterpillar’s short interest is ~9.22 million shares. The company’s average trading volume is ~4.45 million shares. As a result, Caterpillar’s short interest ratio is 2.07x. The ratio indicates that it would require two days to cover all of the short positions in Caterpillar. Below are the short interest ratios for Caterpillar’s peers:

  • Honeywell’s (HON) short interest is ~6.3 million shares, while the average number of shares traded is 2.6 million. The short interest ratio is ~2.4x, which indicates that it will take two days to cover the short positions.
  • General Electric’s (GE) short interest is 99 million shares. The average number of shares traded is 58.20 million, which indicates that it will take two days to cover the short positions.
  • Deere’s (DE) short interest ratio stands at 2.3x, which means that it will take two days to cover the short positions.

Investors could hold Caterpillar indirectly by investing in the iShares U.S. Industrials ETF (IYJ). IYJ invests 2.6% of its portfolio in Caterpillar as of September 20.

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