Chart in Focus: Tesoro’s Falling Short Interest
Short interest in Tesoro
Tesoro (TSO) has witnessed a fall in its short interest from 9% in mid-April to the current level of 6%. This trend indicates that the bearish sentiment for the stock is decreasing. Short interest is measured as the percentage of outstanding shares. During the same period, TSO’s stock price rose 12%.
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Why the fall in bearish sentiment?
The fall in bearish sentiment could be due to Tesoro’s (TSO) 1Q17 earnings, rising index values, and completion of the Western Refining acquisition. In 1Q17, Tesoro’s earnings surpassed estimates. Tesoro’s operating income grew 25% year-over-year, led by a rise in its Refining and Logistics segments’ earnings. For more on this topic, please read Tesoro Beats 1Q17 Earnings.
Tesoro’s refining index values in 2Q17, which are regional crack indicators in the areas where TSO operates, have risen over 1Q17 as well as 2Q16. TSO’s consolidated refining index has risen to $14.80 per barrel in 2Q17 so far, compared to $12.40 per barrel in 1Q17 and $13.90 per barrel in 2Q16. This could point toward a better refining margin for TSO in 2Q17.
The acquisition of Western Refining could provide a boost to Tesoro growth due to higher capacities, assets, and operational synergies.
Peers’ short interest
TSO’s peers Delek US Holdings (DK), Valero Energy (VLO), and HollyFrontier (HFC) have also witnessed their short interest falling 1.0%, 0.2%, and 2.0%, respectively, since mid-April. Currently, DK, VLO, and HFC have short interest readings of 8.2%, 4.1%, and 6.3%, respectively.
During the same period, VLO and HFC stock fell 2% and 7%, respectively. However, Delek stock has risen 9% since mid-April.