uploads///Part  Short Interest November

ITW’s Short Interest Is at Its Highest Point: What Could It Mean?

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Dec. 4 2020, Updated 10:53 a.m. ET

Illinois Tool Works’ short interest

In the latest short interest report on November 2, the data indicated that Illinois Tool Works’ (ITW) short interest was at its highest point of 2018.

According to the report, ITW’s short interest was 1.56% of its outstanding shares compared to 1.27% on October 15. The increase in its short interest suggests a rise in negative sentiments toward the stock. The stock has fallen more than 25% in 2018 so far.

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The sell-off in the US markets has attracted more bears toward the stock, as ITW continues to face the challenge of unfavorable foreign currency, which is affecting its revenue growth and earnings. The trend is likely to continue in the upcoming quarter, and continued volatility in the stock market could attract more bears and increase short interest.

Short interest ratio

ITW’s short interest is ~5.2 million shares. The company’s average trading volume is ~1.7 million shares. As a result, its short interest ratio is ~3.05x, indicating that it would require three days to cover all of the short positions in the stock. Let’s look at the short interest ratios of ITW’s peers:

  • Honeywell’s (HON) short interest is ~6.08 million, while its average number of shares traded is 3.06 million. Its short interest ratio is ~2.0x, which indicates that it will take two days to cover the short positions in the stock.
  • General Electric’s (GE) short interest is 122.86 million. Its average number of shares traded is 99.42 million, which indicates that it will take two days to cover the short positions in the stock.
  • Caterpillar’s (CAT) short interest ratio stands at 2.3x, which means that it will take two days to cover the short positions in the stock.

Those interested in holding ITW indirectly can do so via the Invesco S&P 500 Equal Weight Industrials ETF (RGI), which holds 1.5% in ITW as of November 13.

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