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Noble Corp. Message Board

  • woodfrog8 woodfrog8 Aug 5, 2013 2:58 PM Flag

    Short interest NE and ESV

    I'm somewhat surprised by the % of short interest in both these drillers. Both have a short interest, roughly 2.5%. Rig % is much lower as of 7/15/13------anyone have any thoughts on these figures and possibly some other drillers I am not as familiar

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    • I looked at nasdaq's listing of the short interest in both NE and ESV over the past year, and nothing in particular stood out. ESV had higher short interest over a prolonged period from August 2012 into January. NE had some periods of higher short interest too between those dates. They were weak today, and I used the weakness to buy a little more ESV so that I now have equal positions (dollar wise) in both. I'm expecting a mini sector rotation into these names at some point before the end of the year which will bring NE at least to 41, and ESV to at least 60. I think there's a decent chance of that happening soon with these never much down markets.

    • Steep increases and decreases of NE valuation are visible if you examine the 1 year chart. They happen at 2 month intervals. The preponderance of resistance is at around 40 over that one year period. It's a clear oscillation of value over that 1 year period, as the chart indicates. Short positions are playing that channel, expecting to profit from a continuation of the apparent trading pattern.

      • 1 Reply to cgrach
      • I don't short, but when I look at the choppy chart action in the highly cyclical drillers (as CG notes about NE above), I can see why/when a person would. NE, and most drillers, have a pretty sawtoothy chart, which seems a little stupid when you consider their multiples, backlogs and the relative transparency of their cash flow projections. But the market is what it is, not what we think it should be and I do not expect it will suddenly "come to it's senses" about the drillers. They may go higher, but they will always trade like cyclicals.

        The charts reflect that. The market over-sells the drillers, pretty much every time there's any bad economic headlines, euro trouble etc.... Some people grit their teeth and hold through it, some swing trade, some use options to create a buy low/sell high discipline, some see the chart and think it suggests shorting, from time to time. But I think the latter are few in number, I've never had the sense that NE's price action was very often driven by shorting.

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