FirstEnergy Carries the Highest Short Load in Its Peer Group

FirstEnergy is the most shorted name among its closest utility peers heading into today's Q3 print, with short interest at 5.5% of free float. Its neighbours are considerably cleaner: PPL, EXC, DUK, and AEP all carry materially lower short positions, and each gained between 1.8% and 5% over the past week. FirstEnergy rose 1.2% over the same period, less than a third of the peer median of roughly 3.8%.

That short position has been building steadily. A month ago, SI was closer to 4.7% of float. The pace picked up sharply around October 8, when bears added the equivalent of roughly two million shares in a session, and the stock has not fully recovered the ground lost relative to peers since. At 31.75 million shares short, this is the highest level in at least a year. The borrow market, however, shows no strain: cost to borrow is 0.53%, up about 11% on the week but still firmly in cheap territory, and availability is above 1,075% of short interest, meaning supply for new shorts remains effectively unlimited. Shorts are present and growing, but not yet under any squeeze pressure.

The analyst picture is notably constructive at exactly the moment the stock is trailing. Morgan Stanley raised its target to $50 last week, maintaining Overweight. BMO Capital initiated at Outperform with the same $50 target on Monday, the day before the print, and HSBC started coverage at Buy, also at $50, earlier in the week. JP Morgan trimmed its target to $50 from $52 while holding Neutral, and Barclays cut to $49 from $54 while staying Overweight. The consensus clusters tightly around $50, implying roughly 8% upside from the $46.27 close. The disconnect is plain: the Street is adding constructive coverage and the stock is trading well below consensus, while peers have already moved toward their own targets. Something in FirstEnergy's specific story is keeping investors cautious even as the broader regulated utility sector benefits from falling rate expectations and data centre power demand.

One factor on the register worth noting: Stephen Schwarzman filed a Schedule 13D on FirstEnergy in August 2025, the most activist-leaning form on the 13D/G spectrum, with a stake then at 4.99% of shares. That filing is as-last-disclosed; stakes can move below 5% without a further filing, so the current position is unknown. Blackstone's institutional holding of roughly 4.98% of shares was last reported as of June 30, consistent with the same bloc. The presence of a 13D on the register is not a trivial background fact for a regulated utility, where ownership questions can intersect with state commission proceedings.

Options positioning leans toward the upside. The put/call ratio is 0.49, about one standard deviation below its 20-day average of 0.54 and near the lowest level of the past year. That suggests call positioning is relatively dominant, which runs against the short interest signal. The two data points point in opposite directions: shorts are at a year-high, but options traders are leaning constructive rather than defensive.

Today's print will test whether FirstEnergy's Q3 operating results, rate case progress, and capital plan commentary are enough to close the gap with a peer group that has already moved sharply higher in anticipation of a favourable rate environment.