Short interest in Delek
In the series, we have reviewed Delek US Holdings’ (DK) stock performance and moving averages in the fourth quarter. We also discussed Delek’s stock price forecast until December 31 based on its current implied volatility. In the previous part, we discussed Delek’s dividend yield trend. In this part, we’ll analyze the changes in the company’s short interest.
The short interest, expressed as a percentage of outstanding shares, in Delek has risen from 5.9% on September 27 to the current level of 6.3%. Usually, a rise in the short interest implies an increase in the bearish sentiment for a stock. During the same period, Delek stock has fallen 30.3%.
Why the change in sentiments?
The short interest in Delek has risen despite the company witnessing a recovery in its financials. The company posted better-than-expected third-quarter earnings. In the current year, Delek’s financials have recovered with positive earnings in the past few quarters, which also increased the company’s cash flows from operations.
The refining crack environment has been weak in the fourth quarter, which points towards lower earnings for refiners in the fourth quarter. The industry conditions had a negative impact on Delek’s earnings, especially during the period when financials were recovering. The weakness hasn’t been perceived well by the markets, which likely created the bearish sentiment for the stock.
Peers’ short interest
Like the trend in Delek, the short interest in PBF Energy (PBF), HollyFrontier (HFC), and Phillips 66 (PSX) has risen 0.2%, 0.8%, and 0.2%, respectively. Currently, the short interest in PBF Energy, HollyFrontier, and Phillips 66 is 3.9%, 4.8%, and 1.4%, respectively.
If we review the stock prices during the same period, PBF Energy, HollyFrontier, and Phillips 66’s stocks have fallen by 41.3%, 33.0%, and 30.5%, respectively.
Next, we’ll discuss Delek’s valuations.