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Will Albemarle’s Short Interest Come Down?

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Albemarle’s short interest

On November 15, the short interest data showed that Albemarle’s (ALB) short interest fell marginally compared to the previous report. However, the company’s short interest continues to be on the higher side, which indicates that the negative sentiments towards the stock still persist. As of November 15, Albemarle’s short interest as a percentage of its outstanding shares was 11.93%—compared to 12.35% in the previous report.

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Albemarle’s short interest increased following a report from Morgan Stanley (MS) in February. The report projected that the lithium price would fall by more than 45% by 2021. There are also concerns that the lithium supply would outsmart the demand. Since then, Albemarle’s short interest has remained high. Currently, the lithium joint venture with Mineral Resources could help bring down the short interest. However, Chile will likely file a lawsuit against Albemarle for not adhering to the terms of the contract made in 2016. If the decision goes against Albemarle, the stock could attract more bears and the short interest could increase.

Short interest ratios

Albemarle’s short interest stood at 12.67 million shares. The company’s average trading volume was 1.37 million shares, which implies a short interest ratio of 9.24x. The ratio indicates that it would take approximately nine days to cover all of the stock’s short positions. Below are peers’ short interest ratios.

  • W.R. Grace’s (GRA) short interest was 1.58 million shares. The company’s average number of shares traded was 0.66 million, which means that it would take two days to cover all of its short positions.
  • Sociedad Química y Minera de Chile’s (SQM) short interest ratio stands at 10.96x, which means that it would take nearly 11 days to cover all of its short positions.

Investors can get broad-based exposure to Albemarle by investing in the Invesco WilderHill Clean Energy ETF (PBW), which invests 3.2% of its portfolio in Albemarle.

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