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Weatherford Has Upside after Its Alliance with Nabors

PART:
1 2 3 4 5
Part 3
Weatherford Has Upside after Its Alliance with Nabors PART 3 OF 5

Short Interest in Weatherford Increased: What Does It Mean?

Short interest in Weatherford International

Short interest in Weatherford International (WFT) stock, as a percentage of its float, was 12.5% as of February 17, 2017—compared to 10.5% as of December 30, 2016. Since the end of 4Q16, short interest in Weatherford International stock rose 19%. As noted in the following graph, Weatherford International’s stock price and short interest as a percentage of float have been inversely related in the past three years. Weatherford International accounts for 0.36% of the iShares US Energy ETF (IYE). The Oil & Gas Equipment & Services industry makes up 15.6% of IYE.

Short Interest in Weatherford Increased: What Does It Mean?

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Short interest and stock price

Short interest is the number of shares sold short, divided by the number of shares outstanding. A rise in short interest as a percentage of float, or a rise in short interest, indicates that more investors expect the stock’s price to fall. Weatherford International’s stock price has risen 14% since December 30, 2016, despite the rise in short interest.

However, investors should note that the market could go against investors’ sentiment. Also, the share price could increase when investors start buying the stock to cover their short positions. Energy stocks are typically correlated with crude oil prices. What’s Weatherford International’s correlation with the crude oil prices? Let’s find this out in the next part of this series.

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