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Identifying Upstream Stocks with High Short Interests

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Upstream stocks with high short interests

On January 13, 2017, California Resources (CRC) had the highest short interest-to-equity float ratio among the upstream stocks in the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) at ~30.1%. One month ago, its ratio was ~37%. Three months ago, it was ~43.7%.

California Resources’ short interest-to-equity float ratio has fallen 30.9% over the last three months. During this period, the stock has risen 78.3%. The company’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 9.2x.

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California Resources was among the high implied volatility stocks we looked at in the previous part of this series. Expectations of large movements in a stock can increase its implied volatility. High short interest in a stock reflects traders’ expectations of a downside. Stock prices can move wildly as the bulls and bears slug it out.

Synergy Resources

Synergy Resources’ (SYRG) short interest-to-equity float ratio is ~23.8%. Synergy Resources has risen ~22.2% in the past three months. Its short interest-to-equity float ratio has risen 4.4% during the same period.

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Continental Resources

Continental Resources’ (CLR) short interest-to-equity float ratio is ~21.5%. Its stock has fallen 2.1% in the last three months. The stock’s short interest-to-equity float ratio has fallen 7.2% during the same period. Its net debt-to-EBITDA ratio is 4.9x.

Sanchez Energy

Sanchez Energy’s (SN) short interest-to-equity float ratio is ~19.4%. Its net-debt-to-EBITDA ratio is 10x. The stock has risen 48.3% in the past three months. Its short interest-to-equity float ratio has fallen 1.8% during the same period. 

Sanchez Energy was also among the high implied volatility stocks that we looked at in the previous part of this series.

Denbury Resources

Denbury Resources’ (DNR) short interest-to-equity float ratio is ~16.3%. In the past three months, the stock has risen 35.2%, and its short interest-to-equity float ratio has fallen 20%. Its net-debt-to-EBITDA ratio is 12.5x. It’s also one of the high implied volatility stocks we discussed in the previous part of this series.

Generally, there’s an inverse relationship between returns and short interest. In most cases, stocks that witness rises in their prices also see falls in their short interests.

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