NBR’s Short Interest Decreasing: What Does It Mean?


Jul. 21 2016, Updated 7:06 p.m. ET

Nabors Industries’s short interest

Nabors Industries’s (NBR) short interest as a percentage of its float was 4.1% on July 15, compared to 4.2% on March 31. Since the end of 1Q16, NBR’s short interest has decreased by 2%.

As noted in the graph below, NBR’s share price and short interest as percentage of float have been inversely related in the past three years. NBR comprises 0.01% of the Vanguard Russell 1000 ETF (VONE).

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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 decline in short interest as a percentage of float, or a fall in short interest, indicates that fewer investors expect the stock’s price to fall.

NBR’s stock price has gone up by ~6% since March 31, reflecting the fall in short interest. Since March 31, NBR’s smaller market cap peer Flotek Industries’s (FTK) share price has nearly doubled.

However, investors should note that the market could go against investors’ sentiment. Also, share price could increase when investors start buying the stock to cover their short positions.


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