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

Alex Chamberlin - Author

Aug. 22 2016, Updated 11:04 a.m. ET

Weatherford International’s short interest

Weatherford International’s (WFT) short interest as a percentage of its float was 6.2% on August 12, 2016, compared to 6.8% on June 30.

Since the end of 2Q16, WFT’s short interest has fallen by 8%. WFT’s short interest as a percentage of float and its share price have been inversely related in the past three years. WFT makes up 3.1% of the iShares US Oil Equipment & Services ETF (IEZ). The oil and gas equipment and services industry makes up 77.5% of IEZ.

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Implications of Weatherford International’s short interest

Short interest is the number of a company’s shares sold short divided by the number of its outstanding shares. A rise in short interest as a percentage of float, or a fall in short interest, indicates that most investors expect a stock’s price to fall.

Since June 30, 2016, WFT’s stock price has fallen by ~3%. Since June 30, WFT’s smaller market cap peer CARBO Ceramics’ (CRR) share price has risen by 10%. However, investors should note that the market could turn against investors’ sentiments. Also, a company’s share price could rise if investors start buying its stock to cover their short positions.

WFT’s short interest has fallen, but has its volatility fallen as well? We’ll find out in the next part of our series.


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