DCP Midstream’s Short Interest Is above the Industry Average



DCP Midstream’s short interest

DCP Midstream Partners’ (DPM) short interest as a percentage of float had increased before its 2Q16 earnings announcement. DPM’s current short interest of 5.8% is high compared to most of its peers. This could be attributed to DPM’s relatively high commodity price exposure. Moreover, DPM’s short interest is higher compared to its three-year average of 4.0%. This might indicate a bearish sentiment.

The above chart shows one-year closing price and short interest as a percentage of float for DPM. 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 increase in short interest generally indicates pessimism about the stock. However, this might not necessarily result in stock price decline, as short position holders try to cover their short positions, which might 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%. DPM’s short interest as a percentage of float ratio is above the industry average. Sunoco LP (SUN), Tallgrass Energy Partners (TEP), Golar LNG Partners (GMLP), and Cheniere Energy Partners (CQP) are among the AMZ constituents that have the highest short interest to float.

Put call ratio

Put call ratio is another measure to look at investors’ sentiment towards a stock. A high put call ratio might indicate that a large number of investors expect the stock price to decline in the future, and vice versa. DPM has a high put call ratio of 0.9.


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