KNTK Shorts Keep Building as Options Traders Bet the Other Way

Kinetik Holdings is more crowded with short sellers than any of its closest Permian midstream peers right now. Its short interest stands at 13.1% of free float, well above comparable names such as OKE and TRGP where positioning is considerably lighter.

That 13.1% figure has moved fast. A month ago it sat around 9.1%. Over the past week alone it has risen 11.1%. FINRA's fortnightly settlement data, current to October 15, puts 7.5 million shares short with 5.95 days to cover, confirming the build is not a data artefact.

Options Traders Are Reading It Differently

While short sellers pile in, the options market is pointing the other direction. The put/call ratio on October 23 was 0.1683, close to its 52-week low of 0.0991 and well below its 20-day mean of 0.195. Call volume is dominating heavily. That split between the stock-borrow desk and the options desk is unusual and worth watching as the November 4 earnings date approaches.

Borrow Market: Tightening but Not Squeezed

Availability has fallen sharply over the past fortnight. On October 6 it sat above 1,000%, meaning there were more than ten borrowable shares for every one already lent out. By October 23 it had dropped to 183.6%, still comfortable but a steep move in a short period. Cost to borrow has risen with it, up 93% over the past week to 0.99%, and up 164% over the past month. The borrow market is tightening, not yet strained, but the direction is clear.

The ISQ Backdrop

The short build does not happen in isolation. ISQ Global Fund II GP LLC, which holds a Schedule 13D activist position, has been selling continuously since early October. Its disclosed stake has fallen from 18.4% to 15.8% as of the October 15 amendment. The 90-day net sales figure across all ISQ transactions runs to nearly 4 million shares worth more than $215 million. None of those sales were conducted under a 10b5-1 pre-arranged plan. As the activist disclosure note requires: stakes are as-last-disclosed around the 5% threshold, and a holder can exit below that level without filing again.

That persistent supply from a large registered seller gives short sellers a structural tailwind. New buyers are absorbing ISQ's shares, but so far the clearing price has held: KNTK is up about 6.3% over the past month despite the pressure.

Analyst Moves Add Another Layer

Two firms cut price targets last week. Morgan Stanley lowered its target from $70 to $67 on October 21, maintaining Overweight. Jefferies trimmed from $56 to $54 on October 19, keeping Hold. Both hold targets above the current $55.70 price. The consensus mean target across analysts is $58.56. RBC and Barclays both raised targets the week before, reflecting the split view in the analyst community.

The ORTEX short score has risen to 69.9, up from 57.9 ten days ago. Wikipedia attention for the stock is running at a z-score of 4.1 against its own 90-day history, suggesting retail interest has climbed sharply.

The price level that would change the index picture: ORTEX puts a 30% probability on KNTK joining the Russell 1000 at the December Semi-Annual Review, but it needs to close above $59.65 to qualify. The rank date is October 30.

---

Data summary

• SI % of free float: 13.1% (Oct 23), up 11.1% in one week, up 44.1% in one month
• Availability: 183.6% (Oct 23), down from above 1,000% on Oct 6
• Cost to borrow: 0.99%, up 93% week-on-week
• Put/call ratio: 0.1683, z-score minus 1.57 vs 20-day mean
• ISQ stake (last disclosed Oct 15): 15.8%, down from 18.4%
• ORTEX short score: 69.9 (Oct 23)
• Next earnings: November 4