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Jul 25, 2017

S3 Analytics: 2017 CAT Short Interest Declines by $1 Billion as Rally Continues

Caterpillar Inc. (CAT US) short interest has declined by $1 billion as its stock price has rallied 24% in 2017. Caterpillar had been a popular short as the worldwide commodity and agricultural markets slumped from 2012 to 2016 and demand for construction, mining and agricultural machinery bore the brunt of a Capex slowdown. Caterpillar short interest climbed every year since 2012, averaging $1.5 billion in 2012 and $3.3 billion in 2016.

CAT short sellers were down $968 million in mark to market losses, down 30%, in 2016 and short interest began to decline in October 2016. Short interest has decreased by $1.6 billion, down 43%, since then. CAT Short interest is now $2.1 billion.

CAT short sellers’ losses continued to accumulate in 2017 as Caterpillar’s stock price increased by 24%. Shorts were down $187 million prior to today’s 6% move which added $117 million to their losses. Shorts are now down $304 million, down 12% this year.

Caterpillar has seen buying pressure from long shareholders buying stock on the back three straight quarters of increased revenues, but also additional buying pressure from short sellers who covered over 15 million shares of their short positions throughout the year.  Shorts still need to cover 5 million shares to get back to short interest levels seen in 2009-2012.

Want deeper insight into the above analysis? Contact:
Head of Data Analytics, S3 Partners, LLC
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.

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