National Grid reports full-year results on August 6 with an unusual dynamic: short sellers have been abandoning positions at pace even as the stock drifts lower, creating a setup where bear-side conviction is falling while price weakness persists.
The most striking feature of the current positioning is the sharp unwinding of short interest. Estimated short shares have nearly halved over the past month, falling 55% to roughly 745,000 shares, and borrow costs have collapsed in tandem — down 41% week-on-week to just 0.63%. Availability is extremely loose at 732%, meaning there are more than seven shares available to borrow for every one currently lent out. That combination — retreating shorts, cheap borrow, and abundant supply — describes a market where bears are exiting rather than building. Options positioning reinforces the message: the put/call ratio of 0.44 is only modestly above its 20-day average of 0.41, a far cry from the 52-week high of 1.40, implying no unusual demand for downside protection into the print.
The debate heading into results is less about near-term sentiment and more about the structural case. Bulls point to a utility with regulated cash flows, a recent H1 beat of consensus by roughly 3%, and a defensive yield in an uncertain macro environment — the dividend score ranks in the 58th percentile. Bears have had louder institutional backing: Jefferies downgraded to Hold in March and UBS cut all the way to Sell around the same time, both moves coming within the past five months. Quality metrics give the bears something to work with — the ORTEX short score of 30.5 ranks in the 93rd percentile for short pressure relative to peers, free cash flow to sales is negative, and return on capital employed is thin at roughly 3.3%. The EV/EBITDA multiple of 34.7x is elevated for a utility with these return characteristics, even allowing for the capital-intensive grid modernisation cycle. The mean analyst price target carries a data staleness caveat and is not relied upon here.
One ownership dynamic worth noting is that JPMorgan increased its position by over 51 million shares in the most recent reported period to June, a notably large addition for what is largely an index-driven name. Board-level buying has also been modest but present: the Chairman of the Board picked up 1,000 shares in May at $82.54, a small signal at best but directionally constructive. The most recent earnings reactions have been muted to negative — the May print produced a one-day drop of roughly 7%, though the five-day move recovered most of that; the July event produced barely a half-percent move either way.
The August 6 print will test whether the quality and capital allocation concerns flagged by UBS and Jefferies are reflected in the full-year numbers, or whether steady regulated earnings and dividend cover give income-oriented holders reason to look through them.
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