uploads/2018/11/Part-6-4Q18-Dividend-Yield-1.png

3M’s Short Interest Fell: What Does It Suggest?

By

Updated

3M’s short interest

The latest short interest report on October 31 suggested that 3M’s (MMM) short interest fell significantly after being stable for a while. According to the most recent release, 3M’s short interest stood at 1.2% of the outstanding shares, which indicates a fall in the short interest compared to the previous report.

The decrease in 3M’s short interest suggests a decrease in the negative sentiment towards the stock. Based on recent stock price movement,  the short interest begins to build as the stock price goes beyond $207. When the short interest falls below these levels, it suggests that the shorts are covered below $207 level. As a result, 3M’s stock price has remained range-bound in the past two months, which indicates that the bears look to recover their short position when the stock price goes below $200. Currently, the market doesn’t expect 3M’s stock price to fall much.

Article continues below advertisement

Short interest ratio

In terms of the number of shares, 3M’s short interest is ~6.99 million shares. The company’s average trading volume is ~2.55 million shares. As a result, 3M’s short interest ratio is ~2.75x. The ratio indicates that it would require three days to cover all of the short positions in 3M. Below are the short interest ratios for 3M’s peers:

  • Honeywell’s (HON) short interest is ~6.08 million, while the average number of shares traded is 3.12 million. The short interest ratio is ~1.94x, which indicates that it will take two days to cover the short positions.
  • General Electric’s (GE) short interest is 122.86 million. The average number of shares traded is 109.9 million, which indicates that it will take one day to cover the short positions.
  • Caterpillar’s (CAT) short interest ratio stands at 2.3x, which means that it will take two days to cover the short positions.

Investors could hold 3M indirectly by investing in the iShares MSCI USA ESG Select ETF (SUSA). SUSA invests 3.8% of its portfolio in 3M as of November 21.

Advertisement

More From Market Realist