Short interest in Delek
The short interest in Delek US Holdings (DK) fell from 7.0% on April 1 to the current level of 6.5%. Usually, a drop in the short interest implies a decline in the bearish sentiment for a stock. During the same period, Delek stock rose 9.4%.
Why did the sentiments change?
In the first quarter, Delek’s adjusted EPS was $1.54—higher than the estimated EPS of $0.47. The company’s adjusted EBITDA rose 126% YoY to $238 million in the first quarter. The rise was driven by higher contribution margins from the refining and logistics business segments. Delek also continued its expansion activities. The company’s capex rose from $70 million in the first quarter of 2018 to $129 million in the first quarter. Delek continues to focus on expanding its midstream asset base. The company targets an EBITDA of $350 million–$370 million from its midstream segment by 2023.
Refining cracks have been rising in the second quarter, which could have a positive impact on refining earnings.
Improving financials and rising refining cracks could have supported the stock’s positive sentiments. However, the narrowing Midland spread would have partially dented the sentiments.
Peers’ short interest
Like the trend in Delek, the short interest in Valero Energy (VLO), Phillips 66 (PSX), and HollyFrontier (HFC) has fallen by 0.5, 0.2, and 1.3 percentage points, respectively, to 1.3%, 1.3%, and 3.6%, respectively. In the same period, Valero Energy, Phillips 66, and HollyFrontier’s stock prices have fallen 6.0%, 4.6%, and 11.4%, respectively.