Mar 2, 2016

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The Basic Materials Sector Shorts Report: Marathon Oil Corporation (MRO), Freeport-McMoRan Inc. (FCX), Valero Energy Corporation (VLO)

The Basic Materials Sector Shorts Report: Marathon Oil Corporation (MRO), Freeport-McMoRan Inc. (FCX), Valero Energy Corporation (VLO)

Short interest is a measure of how many shares of any given security have been sold short in a period of time. Typically, a stock exchange produces a monthly report on the total amount of short interest in any given stock. This number is expressed as a percentage of stocks sold short which have not yet been covered compared to the total outstanding shares of the stock. The higher the short interest, the more investors are betting the stock will fall in price. However, a very high short interest can be the predecessor to a rise in stock price.

A stock’s short interest ratio (SIR) indicates how many trading days it would take to cover (i.e., buy back) all existing shorted shares at the stock’s average daily trading volume. To arrive at this number, the total short interest on a given stock is divided by the equity’s typical daily volume.

As with the short-to-float ratio, there’s no distinct line in the sand — but a SIR at or above 5.00 is generally considered noteworthy, since that figure suggests it would take a week for all of the existing short positions to be covered.

Short interest data is released on a semi-monthly basis by the major U.S. Exchanges, with new data coming out around the second and fourth week of each month. Accordingly, each reporting period covers a roughly two-week span of time.

If the number of shorted shares declined during the latest two-week period, it suggests the short sellers have been buying back their bearish bets. Conversely, an increase in the number of shares sold short reveals that new pessimistic positions have been created.

As of 12/02/2016 short interest for Marathon Oil Corporation (MRO) stood at 51809698 shares, an increase of 10381242 shares or 20.04 percent compared to 41428456 shares on 29/01/2016. This short interest comprises 8 percent of the entire float. Short interest ratio now stands at 1.82 at the average volume of 28408730 shares.

According to the latest short-interest data for the two-week period ended 12/02/2016 short interest for the stock of Freeport-McMoRan Inc. (FCX) decreased from 222712556 shares at the end of the settlement date of 29/01/2016 to 205233092 shares, marking a decline of -17479464 shares or -8.52 percent. The current short interest accounts for 17.92 percent of the company’s total outstanding common shares and the days-to-cover short interest ratio, on the other hand, is 3.809954 as of 12/02/2016 assuming average daily trading volume of 53867600 shares.

Short interest for the shares of Valero Energy Corporation (VLO) fell -12.6 percent from 13438471 shares on 29/01/2016 to 11935102 shares on 12/02/2016. Investors have taken short positions on 3 percent of the total common shares of the stock that are floating on the exchange. The days-to-cover short interest ratio is now at 1.418424 days. It is based on average daily trading volume of 8414342 shares.

 

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