Keane Group (FRAC US), a provider of oilfield services to the fracking industry and this year’s first U.S.-listed initial public offering, has been on a slippery slope downward since opening at $22 per share back in January. The shares have lost almost 30% of its value since that first day of trading, with bearish bets continuously on the rise.
According to the S3 Black App, short interest exposure (money at risk) has risen to $147.7 million as of 3/10, a 181% increase from 1/31, when the exchange first reported short exposure of $52.5 million. Data shows that the cynics are certainly not heeding the call of Wall Street, where the majority of research analysts initiated either an overweight or outperform rating on 2/14, with an average price target of $25. In fact, shares on loan to short sellers increased from 5.4 million shares ($112 million) on 2/15, to 7.8 million shares ($135.9 million) on 2/28, proving bearish sentiment heightened during that time frame.
More recently, both Citi and BofAML have upgraded the shares as well, citing the extended sell-off and pricing power upside as just a few factors making the stock a compelling buying opportunity at its current valuation. With Keane’s first earnings release expected tomorrow after-market on 3/14, investors will be focused on pricing trends and margin as a measurement for the future prospects of the company.
Short sellers have enjoyed a mark-to-market paper gain of $50.1 million since Keane first listed its shares back in January, a slick return of 39%. There is certainly no denying that the shorts have made the right call on the stock so far.
For more information on the above analysis, please contact:
Matthew Unterman, Director, S3 Partners, LLC
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