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How Short Interest Affects Integrated Energy and Refiner Stocks

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Nov. 20 2020, Updated 2:07 p.m. ET

Alon USA Energy

On February 23, 2017, Alon USA Energy (ALJ) had the highest short interest-to-equity float ratio among our list of integrated energy and refiner stocks. Its ratio was 13.9%.

In the past three months, Alon USA Energy stock has risen 22.8%. Its short interest-to-equity float ratio has fallen 9.3% during the same period. Alon USA Energy’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is 3.3x. We discussed ALJ’s earnings trends Part Two of this series. It’s also one of the high-implied-volatility stocks we discussed in Part One of this series.

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PBF Energy

PBF Energy’s (PBF) short interest-to-equity float ratio is 13.4%. In the last three months, the stock has fallen 3.6%, while its short interest-to-equity float ratio has risen 7.2%. The company’s net debt-to-EBITDA ratio is 4.8x.

In the last four quarters, PBF Energy’s revenue has risen 41.3%. Its operating income was $139.8 million in 4Q16, compared to its adjusted operating income of -$176 million in 4Q15.

HollyFrontier

HollyFrontier’s (HFC) short interest-to-equity float ratio is 8.1%. In the last three months, the stock has risen 3.3%, while its short interest-to-equity float ratio has fallen 12.8%. Its net debt-to-EBITDA ratio is 1.4x.

In the last four quarters, HollyFrontier’s revenue has risen 0.4%. Its operating income was $112.3 million in 4Q16, compared to its operating income of -$64.7 million in 4Q15. Its operating profit margin is 5.8%.

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Tesoro

Tesoro’s (TSO) short interest-to-equity float ratio is 7.6%. In the last three months, the stock has risen 3.3%, while its short interest-to-equity float ratio has risen 109.0%. The company’s net debt-to-EBITDA ratio is 1.9x. In the last four quarters, Tesoro’s revenue has risen 6.4%, and its adjusted operating income has fallen 80.1%. Its operating profit margin is 7.1%.

Delek US Holdings

Delek US Holdings’ (DK) short interest-to-equity float ratio is 7.3%. Its net debt-to-EBITDA ratio is 5.0x. In the past three months, its stock has returned 17.5%. Its short interest has fallen 18.5% during this period.

In the last four quarters, DK’s revenue has fallen 16.5%. It incurred adjusted operating losses of $2.8 million in 3Q16, compared to an operating income of $14 million in 3Q15. Delek US Holdings’ operating profit margin is -0.8%. It’s expected to announce its 4Q16 earnings on February 27, 2017.

Conclusions

From the analysis in this series, we can make the following observations:

  • Most stocks have witnessed falls in their short interests as they’ve risen.
  • Traders and investors are more bearish on refiner stocks than on integrated energy stocks. All of the companies leading in short interest are relatively small refiners with less diversification in their operations, potentially reducing their abilities to withstand volatility in the refining industry.
  • Markets are less bearish on larger and more diversified integrated energy companies. They also figure among the stocks with the lowest volatilities.
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