Why Short Interest in Andeavor Has Fallen
Short interest in Andeavor
Andeavor (ANDV) has seen a fall in its short interest (percentage of outstanding shares) from 9% in mid-April to the current level of 3%. This kind of fall usually means that bearish sentiment for the stock is falling. Also, during the same period, ANDV’s stock price rose 29%.
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Why the fall in bearish sentiment?
The fall in bearish sentiment could be due to the acquisition of Western Refining. Plus, higher cracks in the quarter have further boosted the stock.
Andeavor has completed its acquisition of Western Refining and begun the integration process. This measure is likely to bring in huge benefits of $350 million–$425 million in terms of higher capacity and operational synergies to the merged entity. Andeavor has already seen synergetic benefits of ~$80 million in terms of annual run rate as of August 8.
Plus, due to Hurricane Harvey, refining cracks have risen steeply in 3Q17. We’ll discuss the trend in ANDV’s refining index later in this series. Index values have risen quarter-over-quarter and year-over-year in 3Q17 across regions. This rise could result in higher refining margins for Andeavor in its upcoming 3Q17 results.
Peers’ short interest
ANDV’s peers Phillips 66 (PSX), HollyFrontier (HFC), and Delek US Holdings (DK) have also seen a fall in their short interest by 0.2%, 0.7%, and 2.5%, respectively, since mid-April. Currently, PSX, HFC, and DK’s short interests stand at 1.6%, 7.5%, and 6.7%, respectively.
During the same period, PSX, HFC, and DK saw stock price rises of 21%, 31%, and 17%, respectively.