Has Short Interest in XOM, CVX, RDS.A, and BP Risen?
Short interest in integrated energy stocks
In the previous part, we evaluated the comparison of integrated energy stocks in terms of forward valuations. Now, in this part, we will consider the changes in short interest.
ExxonMobil (XOM), Chevron (CVX), BP (BP), and Royal Dutch Shell (RDS.A) have witnessed a mixed trend in the changes in their short interest (percentage of outstanding shares) from August 2, 2017, to October 13, 2017. Short interests in XOM stood almost flat in the stated period.
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However, short interest in CVX rose from 0.16% on August 2, 2017, to ~1.4% on October 13, 2017. This shows that the bearish sentiments for CVX have increased marginally.
However, in the same period, short interest in Shell and BP fell 0.02% and 0.05%, respectively, on August 2, to 0.18% and 0.26%, respectively, on October 13. From August 2 to October 13, the stock prices of XOM, CVX, Shell, and BP rose 2.2%, 7.9%, 6.2%, and 7.4%, respectively.
Why the fall in bearish sentiment for Shell and BP?
BP has seen a series of events during this period that could have resulted in a fall in its short interest. The company revealed its focus on creating a business structure that can sustain even at lower oil price levels of $35.00–$40.00 per barrel.
As expected, BP started six out of seven mega upstream projects during the year. Of these, three projects started operations in 3Q17, which could have led to an upsurge in the positive market sentiment.
Shell’s has seen improvement in its debt and cash flow positions. Plus, synergies from the acquired BG Group have started benefiting the company. These positive events were already reflected in its 2Q17 results, and the market expected the same in its 3Q17 results as well. This trend may have led to a rise in positive sentiment for the stock from August 2 to October 13.
Move onto the next part to learn about these integrated energy stocks’ PEG ratio comparison.