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Short Interest in Tidewater Fell: What Does It Mean?

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Jan. 19 2017, Published 11:25 a.m. ET

Short interest in Tidewater

The short interest in Tidewater (TDW) stock as a percentage of its float was 27.6% as of January 18—compared to 37.3% as of September 30, 2016. Since the end of fiscal 2Q17, the short interest in Tidewater stock has fallen 26%. As noted in the following graph, Tidewater’s share price and short interest as a percentage of its float have largely been inversely related in the past two years. Tidewater accounts for 0.02% of the iShares Core S&P Small-Cap ETF (IJR).

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Short interest and stock price

Short interest is the number of shares sold short, divided by the number of shares outstanding. A rise in short interest as a percentage of float, or a rise in short interest, indicates that more investors expect the stock’s price to fall. Tidewater’s stock price has fallen 20% since September 30, 2016, despite the fall in short interest.

However, investors should note that the market could go against investors’ sentiment. Also, the share price could increase when investors start buying the stock to cover their short positions. Energy stocks are typically correlated with crude oil prices. Has Tidewater’s correlation with crude oil prices increased? We’ll discuss this in the next part.

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