Short interest in Weatherford International
Weatherford International’s (WFT) short interest as a percentage of its float was 13.4% as of May 5, 2017, as compared to ~14% as of March 31, 2017. Since the end of 1Q17, WFT’s short interest has fallen 4%. As noted in the chart below, WFT’s stock price and short interest as a percentage of float have been inversely related over the past three years.
IWV tracks the Russell 3000 Index (RUA-INDEX). The index is composed of 3,000 large companies in the US and has risen 17% in the past year, as compared to the 8% fall in WFT’s stock price.
Implications of short interest in Weatherford International
Short interest refers to the number of a company’s shares sold short, divided by the number of its shares outstanding. A fall in short interest as a percentage of float, or a fall in short interest, indicates that fewer investors expect the stock’s price to fall. Since March 31, 2017, WFT’s stock price has fallen ~22%, despite the fall in short interest.
However, investors should note that the market could go against investor sentiments. Also, a share price can increase when investors start buying the stock to cover their short positions.
You can learn more about the OFS industry in Market Realist’s What Oilfield Services Companies’ Forward Multiples Indicate.