Short interest in EQT
On October 26, 2016, the short interest as a percentage of float (or the short interest ratio) in EQT (EQT) stock was 17.3%. At the beginning of the year, the short interest ratio in EQT was ~5.7%.
As you can see in the above graph, the short interest in EQT has increased significantly since the beginning of the year. An increasing short interest indicates a bearish sentiment for the stock. The rise in the short interest in the middle of the year came after EQT’s Rice Energy (RICE) acquisition announcement on June 19. The stock fell 10% immediately following the announcement, while the short interest in EQT rose to ~13% by the end of June.
However, EQT stock started rising shortly after, while its short interest ratio continued to rise and touched a peak of ~18.5% by mid-September. The recovery in EQT stock followed on the heels of the news that activist hedge fund Jana Partners was opposing EQT’s move to acquire Rice.
Investors could interpret this in two ways. The appreciation in EQT stock could have been driven by the market endorsing EQT’s move to acquire Rice Energy following EQT’s promise to address the sum-of-the-part discount—Jana Partners’ main criticism. It likely caused some investors to reduce the negative bets for the stock. It explains the decline in the short interest to 17.3%, as you saw above.
Another reason for the rally in EQT stock could have been Jana Partners’ interference to stop the deal from happening. Whichever way you look at it, EQT stock has risen ~12.0% since it announced its intention to acquire Rice Energy.
Read Could Jana Partners Foil the EQT–Rice Energy Acquisition? to learn more about the EQT-Rice deal.