Short interest represents the total shares of a particular stock that have been shorted but haven’t been closed out yet. Short interest as a percentage of shares outstanding in Enterprise Products Partners (EPD) stock for the settlement date of November 30, 2016, was 0.30%. It was almost unchanged from November 15, 2016. The short interest in EPD is on the lower side compared to an average of ~0.47% over the last ten years.
The above graph shows changes in EPD’s short interest since the beginning of 2016. The current short interest is at its lowest level since the beginning of 2016. Low short interest in EPD stock most likely indicates that not many investors expect its price to fall further in the near future.
A high short interest as a percentage of float and any sudden increase in short interest indicate that more investors expect EPD stock to fall. However, the price may not necessarily fall, either because investors could be wrong or because the price could increase as investors buy the stock to cover their short positions.
Short interest ratio
Short interest ratio indicates the days it will take for short sellers to cover all their positions. It’s calculated by dividing short interest with the average trading volumes for a particular stock.
For Enterprise Products Partners, short interest on November 30, 2016, was ~7.2 million shares. The average daily trading volume was 4.5 million shares. So Enterprise Products Partners’ short interest ratio is 1.6x. That ratio indicates that it will take 1.6 days to cover all open short positions in EPD stock.