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These Midstream Stocks Lead in Short Interest

Rabindra Samanta - Author
By

Nov. 20 2020, Updated 11:25 a.m. ET

Midstream stocks with high short interest

On March 6, 2017, EnLink Midstream Partners (ENLC) had a short-interest-to-equity float ratio of 10.1%—the highest among all of the midstream companies in the Alerian MLP ETF (AMLP).

In the past three months, EnLink Midstream has risen 10.2%, while its short interest-to-equity-float ratio has risen 7.1%. The company’s net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is now 4.3x.

In the past four quarters, EnLink Midstream’s revenue has risen 14.9%, but its adjusted operating profit fell 48.2%. Its operating profit margin is at 5%, as compared to the industry median of 4.6%.

Remember, high short interest in a stock can reflect the market’s expectation of a large fall. Any expectation of large movements in a stock can cause its implied volatility to rise. (EnLink Midstream was among the high implied volatility stocks that we discussed in Part 1 of this series.)

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Phillips 66 Partners

Phillips 66 Partners’ (PSXP) short interest-to-equity float was 9.4% on March 6, while its net debt-to-EBITDA ratio was 4.3x. In the past three months, Phillips 66 Partners stock has risen 21.4%, and its short interest-to-equity float ratio has risen 215.2%.

In the past four quarters, Phillips 66 Partners’ revenue has risen 121.7%, while its operating profit has risen 67.8%. Its operating profit margin is 63.3%.

Boardwalk Pipeline Partners

Boardwalk Pipeline Partners’ (BWP) short interest-to-equity float ratio is now 8.2%, while its net debt-to-EBITDA ratio is 4.4x. In the past three months, the stock has risen 7.3%, and its short interest-to-equity float ratio has risen 168.8%.

Notably, in the past four quarters, Boardwalk Pipeline Partners’ revenue has risen 8%, while its operating profit has risen 28.4%. Its operating profit margin is now 35.2%.

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Energy Transfer Equity

Energy Transfer Equity’s (ETE) short interest-to-equity float ratio is now at 7.6%, while its net debt-to-EBITDA ratio is 7.8x. In the past three months, the stock has risen 17.2%, and its short interest-to-equity-float ratio has risen 56%.

Energy Transfer Equity was also among the high implied volatility stocks that we discussed in Part 1 of this series. Remember, high short interest in a stock can be a contributing factor to its high implied volatility.

Dominion Midstream Partners

Dominion Midstream Partners’ (DM) short interest-to-equity float is now 6.4%. Its stock has risen 14.4% in the past three months, while its short interest-to-equity-float ratio has risen 32.4%. Its net debt-to-EBITDA ratio is at 2.8x.

In the past four quarters, Dominion Midstream Partners’ revenue has risen 114.6%, while its operating profit has risen 51.5%. Its operating profit margin is at 57.1%.

Interestingly, all of these midstream companies saw the short interest in their stocks rise as prices rose, and this could indicate trader skepticism.

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