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Wester Gas’s Short Interest and the Industry Average

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Jan. 25 2017, Updated 7:36 a.m. ET

Short interest in Western Gas

Short interest in Western Gas Partners (WES) as a percentage of float has fallen to 1.2%. This ratio is lower than its 2016 average of 2.9%, and it’s lower than its historical three-year average of 2.3%. This could indicate a bullish sentiment toward WES stock.

The above chart shows the one-year closing price and short interest as a percentage of float for WES. Remember, short interest refers to the number of shares sold short, whereas short interest as a percentage of float reflects the number of shares sold short, divided by floating shares.

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This means that a high percentage of short interest, or an increase in short interest, generally indicates pessimism about the stock. But this might not necessarily result in a stock price decline because short position holders generally try to cover their short positions, which can result in a stock rally.

Industry average

The Alerian MLP Index (AMZ), which tracks 50 energy MLPs (master limited partnerships), has an average short interest as a percentage of float of 3.1%. This means that the short interest in WES as a percentage of float is below the industry average.

Notably, Sunoco LP (SUN), Boardwalk Pipeline Partners (BWP), and Golar LNG Partners (GMLP) are among the AMZ constituents that have the highest short-interest-to-float ratios.

Put-call ratio

Put-call ratio is another measurement of investors’ sentiments toward a stock. A high put-call ratio might indicate that a large number of investors expect a stock price to decline in the future, and vice versa.

WES has a put-call ratio of nearly zero.

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