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Core Laboratories’ Short Interest Is Increasing, but What Will That Mean?

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Short interest

Core Laboratories’ (CLB) short interest as a percentage of float is 14.9% as of August 8, as compared to 13.4% as of June 30. Since the end of fiscal 2Q16, CLB’s short interest has increased by 12%. As noted in the graph, CLB’s share price and short interest as percentages of float have been inversely related during the past three years. Notably, CLB makes up 0.37% of the iShares US Energy ETF (IYE).

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Implications

Short interest is the number of a company’s shares sold short divided by the number of shares outstanding. A rise in short interest as a percentage of float—or a fall in short interest—indicates that more investors expect the stock’s price to fall. Since June 30, CLB’s stock price has declined by ~8%, reflecting an increase in short interest.

Since June 30, smaller market-cap peer McDermott International’s (MDR) share price has risen by 2%. But investors should note that the market could go against investor sentiment. Also, the share price could increase when investors start buying stock to cover their short positions.

Now let’s investigate CLB’s correlation coefficient.

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