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Utility Stocks with High Short Interest: Do You Own Any of Them?

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NRG Energy

On January 5, 2017, NRG Energy (NRG) had a short interest-to-equity float ratio of 6.7%—the highest among the utility stocks that make up the Utilities Select Sector SPDR ETF (XLU). One month ago, its ratio was 6.7%. Three months ago, its ratio was 5%.

In the past three months, NRG Energy rose 21.1%—the most among the utility stocks shown in the above table. NRG Energy’s short interest-to-equity float ratio rose 34.5% in the last three months.

NRG Energy is also the utility stock with the highest implied volatility. Its relatively high short interest could explain why it has one of the highest implied volatilities in the utilities (XLU) sector.

While stocks can move wildly as the bulls and bears slug it out. High short interest in a stock reflects market expectations of a large fall. It causes the implied volatility to rise. NRG Energy’s cash and cash equivalents were $1.5 billion in 3Q16.

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SCANA

SCANA’s (SCG) short interest-to-equity float ratio is 3.9%. One month ago, it was 3.8%. Three months ago, it was 3.3%. In the last three months, the stock rose 5%, while its short interest-to-equity float ratio rose 21%. SCANA’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 4.9x. Its cash and cash equivalents were $176 million in 3Q16.

WEC Energy

WEC Energy’s (WEC) short interest-to-equity float ratio is 3.9%. One month ago, it was 3.9%. Three months ago, it was 3.5%. In the last three months, the stock rose 3%, while its short interest-to-equity float ratio rose 10.3%. WEC Energy’s net debt-to-EBITDA ratio is 4x. Its cash and cash equivalents were $49.8 million in 3Q16.

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NiSource

NiSource’s (NI) short interest-to-equity float ratio is 3.8%. One month ago, it was 3.3%. Three months ago, it was 3.6%. Its net debt-to-EBITDA ratio is 5.6x.

NiSource’s cash and cash equivalents were $15.5 million in 3Q16. In the last three months, the stock fell 0.7%, while its short interest-to-equity float ratio rose 7.3%. NiSource is also one of the high implied volatility utility stocks discussed in Part 1 of this series.

Consolidated Edison

Consolidated Edison’s (ED) short interest-to-equity float ratio is 3.3%. One month ago, it was 3.9%. Three months ago, it was 3.5%. Its net debt-to-EBITDA ratio is 4.1x.

Consolidated Edison’s cash and cash equivalents were $944 million in 3Q16. The stock rose 1.7% in the last three months, while its short interest-to-equity float ratio fell 7.3%.

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