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

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Forum Energy Technologies’ short interest

Forum Energy Technologies’ (FET) short interest as a percentage of its float was 15.2% as of July 12, 2016, compared to 15.9% as of March 31. Since the end of 1Q16, FET’s short interest has fallen by 3%.

As noted in the graph above, FET’s share price and short interest as a percentage of float have been largely inversely related in the past three years. FET makes up 0.13% of the iShares Russell 2000 Value ETF (IWN).

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Short interest and share price

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, indicates that fewer investors expect a stock’s price to fall.

FET’s stock price has risen by ~30% since March 31, 2016, indicating a fall in its short interest. Since March 31, FET’s smaller market capitalization peer Flotek Industries’ (FTK) share price has nearly doubled. However, investors should note that the Market could go against investors’ sentiments. FET’s share price could also rise when investors start buying the stock to cover their short positions.

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