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NOV’s Short Interest Is Falling: What Does This Mean?

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National Oilwell Varco’s 13F filers

In 1Q16, 255 funds bought National Oilwell Varco’s (NOV) stock, and 231 funds sold NOV’s stock. Total buying funds outnumbered total selling funds by 24 in the quarter.

On March 31, 631 13F filers held NOV in their portfolios. Only eight of these 13F filers had NOV in their top ten holdings. In comparison, 1,479 13F filers held Schlumberger (SLB) in their portfolios on March 31.

NOV makes up 5.1% of the VanEck Vectors Oil Services ETF (OIH). Institutional investors or investment managers file form 13F on a quarterly basis to disclose their recent investment holdings.

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NOV’s short interest

National Oilwell Varco’s short interest as a percentage of its float was 11.5% on June 9, 2016, compared to 13.3% on March 31. Since the end of 1Q16, NOV’s short interest has fallen by 14%. As noted in the graph above, NOV’s share price and short interest as a percentage of float have been inversely related in the past three years.

Short interest is the number of shares sold short divided by the number of shares outstanding. A fall in short interest as a percentage of float or a fall in short interest indicate that fewer investors expect the stock’s price to fall.

Since March 31, NOV’s stock price has risen by ~19%. Since March 31, NOV’s larger market capitalization peer Baker Hughes’s (BHI) share price has risen by 10%. However, the Market could turn against investors’ sentiments. Share prices could also rise if investors start buying stock to cover their short positions.

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