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NGL Energy’s Short Interest is on Par With the Industry Average

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NGL Energy’s short interest

NGL Energy Partners’ (NGL) short interest as a percentage of float has moved dramatically since the beginning of 2016. The ratio has fallen to 2.5% after reaching 5.0% at the end of March 2016. However, it is still greater than the historical three-year average of 1.3%. This might indicate a bearish sentiment.

The above chart shows the one-year closing price and short interest as a percentage of float for NGL. Short interest is the number of shares sold short whereas short interest as a percentage of float is the number of shares sold short divided by floating shares. A high percentage of short interest or an increase in short interest generally indicates pessimism about the stock. However, this might not necessarily result in a stock price decline. Short position holders may try to cover their short positions, which could result in a stock rally.

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Industry average

The Alerian MLP Index (AMZ), which tracks 50 energy MLPs, has an average short interest as a percentage of float of 2.8%. NGL’s short interest as a percentage of float ratio is almost equal to the industry average. The energy sector has a short interest as a percentage of float ratio of 2.9%.

Sunoco LP (SUN), Dominion Midstream Partners (DM), Broadwalk Pipeline Partners (BWP), and DCP Midstream Partners (DPM) are AMZ constituents that have high short-interest-to-float ratios.

The put-call ratio

The put-call ratio is another measure used to assess investor sentiment towards a stock. A high put-call ratio might indicate that many investors expect the stock price to decline in the future. NGL Energy has a put-call ratio of 1.8.

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