Which Utility Stocks Lead in Short Interest?

As of October 19, 2016, NRG Energy (NRG) has the highest short interest-to-equity float ratio among utility stock companies that are part of the Utilities Select Sector SPDR ETF (XLU) at 5.1%. One month ago, the ratio was 4.7%. Three months ago, it was 5.9%.

In the last three months, the stock has fallen 17.5%—the most among the utility stocks in the above table. The short interest-to-equity float ratio fell 13.4% during this period.

As we saw in Part 1 of this series, NRG Energy was also the utility stock with the highest implied volatility.

Apart from the sharp fall in the stock price, the relatively high short interest in NRG Energy can also help explain why it has one of the highest implied volatilities in the utility sector. While stocks can move wildly as bulls and bears slug it out, high short interest in a stock implies expectations of a large fall in the stock. It can cause the stock’s implied volatility to rise.

NRG Energy’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 6.5x. Its cash and cash equivalents were $1.8 billion as of 2Q16.

SCANA’s (SCG) short interest-to-equity float ratio is 3.8%. One month ago, it was 3.7%. Three months ago, it was 4.0%. In the last three months, the stock fell 3.9%. Its short interest-to-equity float ratio fell 3%. SCANA’s net debt-to-EBITDA ratio is 4.3x. Its cash and cash equivalents were $86 million in 1Q16.

Currently, Consolidated Edison’s (ED) short interest-to-equity float ratio is 3.6%. One month ago, it was 3.8%. Three months ago, it was 3.7%. Its net debt-to-EBITDA ratio is 3.7x. Its cash and cash equivalents were $862 million in 2Q16. The stock has fallen 6.9% in the last three months, while its short interest-to-equity float ratio fell 2.4%

NiSource’s (NI) short interest-to-equity float ratio is 3.6%. One month ago, it was 3%. Three months ago, it was 2.9%. Its net debt-to-EBITDA ratio is 5.1x. Its cash and cash equivalents were $28 million in 2Q16. In the last three months, the stock has fallen 11.7%. Its short interest-to-equity float ratio rose 22.2%. NiSource was one of the high implied volatility stocks covered earlier in this series.

WEC Energy’s (WEC) short interest-to-equity float ratio is 3.5%. One month ago, it was 3.6%. Three months ago, it was 3.0%. In the last three months, the stock has fallen 9.1%. Its short interest-to-equity float ratio rose 16.2%. Its net debt-to-EBITDA ratio is 5.3x. WEC Energy’s cash and cash equivalents were $32.1 million in 2Q16.

CenterPoint Energy (CNP) and Duke Energy’s (DUK) short interest-to-equity float ratios are 2.4% and 2.7%, respectively. CenterPoint Energy was one of the high implied volatility stocks covered earlier in this series.