HESM heads into its July 29 results with short sellers pulling back sharply — even as the analyst community has moved steadily negative over recent months.
The most striking positioning shift is in short interest. Bears have cut exposure by roughly 15% in a single week, bringing SI down to about 5.1% of the free float — a meaningful retreat from levels that had held in the 7.7 million share range through most of July. Despite that covering, the borrow market remains entirely relaxed: availability runs near 718%, meaning there are roughly seven shares available to borrow for every one already shorted. Cost to borrow has drifted up about 22% on the week to 0.48%, but that is still a negligibly low rate in absolute terms. Options sentiment offers no drama either — the put/call ratio at 0.47 is virtually flat against its 20-day average, sitting close to the middle of its 52-week range and carrying a z-score near zero. Together, the positioning picture is notably calm heading into the print.
That calm contrasts with a more uncomfortable story from the analyst desk. Morgan Stanley downgraded HESM to Underweight in June, a meaningful step down for a bellwether firm, even while holding its $38 target unchanged. Goldman Sachs moved to Sell in April with a $32 target — well below where the stock trades today at $39.81. The consensus mean target sits around $37.33, implying modest downside from current levels. Bulls can point to a strong dividend score — HESM ranks in the top percentile of the universe on that factor — and an EV/EBITDA multiple near 6.9x that is not obviously stretched for a Bakken-anchored midstream operator with high throughput visibility. Bears counter that EPS forward growth ranks in just the 18th percentile, analyst recommendation momentum is middling at 45, and the stock has already climbed roughly 6% over the past month, compressing whatever margin of safety remained.
Peer behaviour on the session added a touch of context: HESM fell 2% on Monday while most midstream comparables — EPD, OKE, ET — slipped only marginally. TRGP also dropped nearly 1.5%, suggesting some sector-wide softness, but HESM's move was the sharpest in the group. Over the past quarter, history offers mild encouragement: the Q1 print in May produced a 2.8% one-day gain that held through the following week, while February's report was flat-to-slightly-negative on day one before recovering.
Tomorrow's release will test whether HESM's distribution growth story can justify a price that now trades above most analyst targets — and whether the short-covering seen this week reflects genuine conviction or simply pre-earnings risk reduction.
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