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Rising Short Interest in SPN: What’s It Mean?

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Short interest in Superior Energy Services

Short interest in Superior Energy Services’ (SPN) stock as a percentage of float was 11.5% on December 6, 2016, as compared to 8.9% on September 30, 2016. Since the end of 3Q16, short interest in SPN has risen 30%.

SPN’s share price and short interest as a percentage of float have been inversely related during the past three years. Notably, Superior Energy Services makes up ~2.0% of the iShares US Oil Equipment & Services ETF (IEZ).

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Implications of short interest

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

Since September 30, SPN’s stock price has risen ~3%, despite its rise in short interest.

Since September 30, larger market cap peer Schlumberger (SLB) has seen its stock price rise 9%. Weatherford International’s (WFT) stock price has risen 2% since September 30, while Halliburton’s (HAL) stock price has risen 25%. But investors should note that the market could go against investors’ sentiment. Its share price could also rise when investors start buying the stock to cover their short positions.

In the next part, we’ll discuss what SPN’s implied volatility suggests.

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