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Celanese’s Short Interest at Highest Level in 2018: What That Means

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Celanese’s short interest

The latest short interest report on August 31 indicates that Celanese’s (CE) short interest is at the lowest point since the beginning of 2018. According to the latest report, CE’s short interest as a percentage of its outstanding shares is 1.44%. The company’s short interest has risen from 1.09% at the beginning of 2018. The stock has risen ~6% since the beginning of 2018.

The increase in CE’s short-term interest indicates that the stock is attracting more bears and that the negative sentiment for the stock is increasing. In the second quarter of 2018, CE reported adjusted EPS of $2.90, beating Wall Street’s estimate. It reported a revenue increase of ~22.1%.

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Even though CE reported strong earnings, fears of a continued tariff war between China and the United States and the fact that the stock is trading in a range close to its all-time high of $118.11 has made a case for the bears. However, it should be noted that Wall Street expects CE’s strong performance to continue, and the increase in its short interest could come down going forward.

Peers’ short interest

Celanese’s short interest is ~1.95 million shares, while its average trading volume is ~0.88 million shares. As a result, its short interest ratio is 2.2x, which indicates that it would take two days to cover all the short positions in the stock. Below are CE’s peers’ short interest ratios:

  • Olin’s (OLN) short interest is ~5.58 million shares, while its average number of shares traded is 1.6 million. Its short interest ratio is ~3.5x, which indicates it would take four days to cover its short positions.
  • LyondellBasell’s (LYB) short interest is ~5.87 million shares with an average trading volume of 1.95 million shares. So its short interest ratio is 3.0x, which means it would take three days to cover its short positions.
  • Westlake Chemical (WLK) has a short interest ratio of 5.6x, which means it would take six days to cover its short positions.

Investors could hold Celanese indirectly by investing in the Global X Guru Index ETF (GURU), which invests ~2.5% of its portfolio in CE stock as of September 18.

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