Short interest in Williams Partners (WPZ) as a percentage of its float has fallen to 2.9%, lower than its past year’s average of 3.4% and lower than its historical three-year average of 3.2%. The difference could indicate a bullish sentiment on the stock.
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The above chart shows WPZ’s one-year closing price and its short interest as a percentage of its float. Short interest reflects the number of a company’s shares that are sold short, whereas short interest as a percentage of float reflects the number of a company’s shares sold short divided by its floating shares.
High short interest or a sudden rise in short interest generally indicates pessimism about a stock. However, this might not necessarily result in a stock price fall, as short position holders could try to cover their short positions, resulting in a potential stock rally.
The Alerian MLP Index (AMZ), which tracks 50 energy MLPs, has an average short interest as a percentage of its float of 3.4%. WPZ’s short interest as a percentage of its float is below the industry average. Sunoco LP (SUN), Boardwalk Pipeline Partners (BWP), and Golar LNG Partners (GMLP) are among the AMZ constituents with the highest short interest to float multiples.
The put-call ratio is another way of looking at investors’ sentiments toward a stock. A high put-call ratio could indicate that a large number of investors expect a stock’s price to fall in the future, and vice versa. WPZ has a low put-call ratio of ~0.3.