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Traders Are Most Bearish about These Midstream Stocks

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Dec. 4 2020, Updated 10:51 a.m. ET

Midstream stocks with high short interest

On December 12, 2016, EnLink Midstream (ENLC) had a short-interest-to-equity float ratio of 9.5%, the highest among all the midstream companies that are part of the Alerian MLP ETF (AMLP). One month ago, the ratio was 7.7%. Three months ago, it was 10.2%.

In the last three months, EnLink Midstream rose 7.9%. Its short-interest-to-equity float ratio fell 7.1%. The company’s net-debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 4.5x. Its cash and cash equivalents were $18 million in 3Q16. EnLink Midstream is one of the high implied volatility companies we looked at in part one of this series.

High short interest in a stock can reflect the market’s expectation of a large fall. Expectations of large movements in a stock can cause its implied volatility to rise.

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NuStar Energy

NuStar Energy’s (NS) short-interest-to-equity float is 5.9%. One month ago, it was 6%. Three months ago, it was 6.7%. Its net-debt-to-EBITDA ratio is 5.4x.

The company’s cash and cash equivalents were $118.9 million at the end of 3Q16. In the past three months, NuStar Energy’s stock has risen 4%. Its short-interest-to-equity-float ratio has fallen 12%.

Tallgrass Energy Partners

Tallgrass Energy Partners’ (TEP) short-interest-to-equity float is 4.9%. One month ago, it was 6.4%. Three months ago, it was 8.4%. Its net-debt-to-EBITDA ratio is 4.1x.

Its cash and cash equivalents were $1.6 million at the end of 3Q16. In the last three months, the stock has fallen 2.2%. Its short-interest-to-equity-float fell 41.5%.

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Energy Transfer Equity

Energy Transfer Equity’s (ETE) short-interest-to-equity float is 4.9%. One month ago, it was 5.2%. Three months ago, it was 4.8%. Its net-debt-to-EBITDA ratio is 7.9x.

Its cash and cash equivalents were $606 million at the end of 3Q16. In the last three months, the stock has fallen 5%, and its short interest to equity float has risen 2.3%. ETE is also one of the high implied volatility stocks we discussed in part one of this series.

Dominion Midstream Partners

Dominion Midstream Partners’ (DM) short-interest-to-equity float is 4.8%. One month ago, it was 4.2%. Three months ago, it was 5.3%. Its cash and cash equivalents were $35 million at the end of 3Q16. Dominion Midstream Partners’ stock has risen 7.3% in the last three months. Its short-interest-to-equity float ratio has fallen 8.7%. Its net-debt-to-EBITDA ratio is 1.4x.

Generally, we see an inverse relationship between the short-interest-to-equity-float ratio and the three-month price movements of a stock.

Boardwalk Pipeline Partners (BWP) and NGL Energy Partners (NGL) have short-interest-to-equity float ratios of 3.1% and 0.6%, respectively.

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