Barron’s Energy Review : A Whole Lot of Shorting Going On

Chesapeake Energy: A Whole Lot of Shorting Going On

Sterne Agee CRT’s Tim Rezvan is feeling bullish about Chesapeake Energy (CHK), which he upgraded on June 29. One of the reasons: The latest short interest data. He explains:

Daniel Acker/Bloomberg News

Largest Increases in Short Interest Among Coverage Names:PetroQuest Energy (PQ), Cheasapeake, Noble Energy(NBL). The largest increase in short interest came from PetroQuest Energy, which had a 16.1% increase to 7.2 million shares (11.0% of shares outstanding, 5.0 days to cover). Other large increases were seen in Chesapeake Energy, which had a 14.1% increase to 185 million shares (27.8% of shares outstanding, 8.1 days to cover), and Noble Energy, which had a 10.3% increase to 17.9 million shares (4.6% of shares outstanding, 4.1 days to cover).

June 30 Data Likely Represents Peak of Bear Case Fervor for Chesapeake Shares. Our June 29 upgrade of Chesapeake shares to Buy from Underperform reflected what we believed was oversold conditions, and month-end short interest data validates this thesis. Short interest in Chesapeake shares increased 14% to 185 million shares from mid-June to the end of June (+163% from the end of February). We expect profit-taking from shorts to provide further support to Chesapeake shares into 2Q earnings

Here’s a chart of the short interest in Chesapeake, which as the analysts note is just massive:

Shares of Chesapeake Energy have tumbled 3.4% to $10.98 at 9:57 a.m. today, while Noble Energy has fallen 0.3% to $38.94, and Petroquest Energy has gained 1.7% to $1.75.

Read more on protecting your assets at http://www.youroffshoremoney.com

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s