Why Short Interest in Valero Energy Fell
Short interest in Valero
Valero Energy (VLO) has seen a decline in its short interest as a percentage of outstanding shares from 4.3% at the end of June 2017 to its current level of 4.0%. This usually implies that the bearish sentiment for the stock has decreased. Over the same period, Valero stock rose 6%.
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What affected Valero in 3Q17?
In 3Q17, a series of events impacted Valero stock. The primary influence was VLO’s 2Q17 earnings, which surpassed estimates. VLO’s adjusted net income increased to $548 million in 2Q17 from $503 million in 2Q16. VLO’s adjusted net income increased due to a year-over-year rise in its adjusted Midstream and Refining segments’ earnings. However, its adjusted Ethanol segment’s earnings fell.
In 3Q17, Valero’s refining margin indicators, which are regional crack indicators in the areas where VLO operates, have risen over 2Q17. Valero’s indicators rose in all four of its operating regions, pointing toward a likely rise in Valero’s refining margin in its upcoming 3Q17 earnings. For more on this topic, please refer to Part 4 of this series. As we noted earlier, Hurricane Harvey impacted refining cracks favorably.
Peers’ short interest
Delek US Holdings’ (DK) short interest has fallen 1.8% since the end of June. However, short interest in HollyFrontier (HFC) and PBF Energy (PBF) rose 0.5% and 4.7%, respectively. Currently, DK, HFC, and PBF have short interest levels of 6.3%, 7.4%, and 22.6%, respectively.
Since the end of June, HFC and PBF have risen 16% and 12%, respectively. However, DK fell 3% in the same period.