uploads/2018/12/Part-5-Dividend-short-interest-Q4-2018-1.png

Why IFF’s Short Interest Is on a Declining Trend

By

Updated

IFF’s short interest

The latest short interest report, which was released on November 30, indicates that International Flavors & Fragrances’ (IFF) short interest has been on a declining trend since rising to 4.8%.

According to the report, the company’s short interest as a percentage of its outstanding shares stands at 3.12% compared to 3.53% in the previous quarter.

The recent sell-off in the US market resulted in the change in IFF’s short interest. The company’s increase in its debt and its number of outstanding shares to support the completion of its Frutarom acquisition also played on investors’ minds.

Article continues below advertisement

However, IFF reported a strong third quarter and met expectations on both the revenue and earnings fronts. Given that the stock is still in the oversold position with a relative strength index of 19, the boost that Frutarom will provide in the fourth quarter could keep the downward trend in its short interest ongoing.

Peer comparison

International Flavors & Fragrances’ short interest is 3.32 million shares, while its average trading volume is 1.13 million shares. As a result, the company’s interest ratio is ~3.9x, which indicates that it would take almost four days to cover its short positions. Let’s take a look at the company’s peers:

  • Sensient Technologies’ (SXT) short interest is 3.32 million shares, while its average trading volume is 462,000. As a result, the company’s interest ratio is 6.97x, which indicates that it would take seven days to cover its short positions.
  • The Clorox Company’s (CLX) short interest ratio is 7.7x, which means that it would take approximately eight days to cover its short positions.
  • Estée Lauder’s (EL) short interest ratio is 2.9x, which suggests that it would take three days to cover its short positions.

Investors can hold IFF indirectly through the iShares Morningstar Mid-Cap ETF (JKG). JKG has invested 0.8% of its portfolio in IFF as of December 21.

Advertisement

More From Market Realist