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Short Interest in SPN Has Risen, but What’s That Mean?

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Short interest in Superior Energy Services

Short interest in Superior Energy Services’ (SPN) stock as a percentage of its float was 10.4% on October 13, as compared to 6.9% on June 30. Since the end of 2Q16, short interest in SPN has risen 51%. As noted in the graph below, SPN’s share price and short interest as a percentage of float have generally been inversely related in the past three years. Notably, SPN makes up 0.18% of the iShares US Energy ETF (IYE).

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Implications of short interest

Short interest is the number of shares sold short divided by the number of shares outstanding. A rise in short interest as a percentage of float, or a rise in short interest, indicates that more investors expect a stock’s price to fall. Since June 30, SPN’s stock price has gone down ~1%, though short interest has increased at a much sharper rate.

Since June 30, the short interest of SPN’s smaller market cap peer, Flotek Industries (FTK), has risen 7%. However, investors should note that the market could go against investors’ sentiment. And remember, a share price can rise when investors start buying the stock to cover their short positions.

Energy stocks are also typically correlated with the price of crude oil. So has SPN’s correlation with crude oil increased? We’ll explore this question in the next part of this series.

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