WFT’s Short Interest Falling, but What Does It Mean?



Weatherford International’s short interest

Weatherford International’s (WFT) short interest as a percentage of float was 7.5% on November 7, as compared to 9.6% on September 30. Since the end of 3Q16, WFT’s short interest has fallen 22%.

WFT’s share price and short interest as a percentage of float have been inversely related for the past three years. Notably, WFT makes up 2.3% of the iShares US Oil Equipment & Services ETF (IEZ). The oil and gas equipment and services industry makes up 78.9% of IEZ.

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Implications of Weatherford International’ short interest

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

Since September 30, WFT’s stock price has fallen ~32%, despite the fall in short interest. Since September 30, smaller market cap peer CARBO Ceramics’ (CRR) share price has fallen 43%. However, investors should note that the market could go against investors’ sentiments. Also, a share price can increase when investors start buying the stock to cover their short positions.

Although the stock’s short interest has fallen, has volatility fallen for Weatherford International as well? Continue to the next part to find out.


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