BKH shorts surge ahead of tomorrow's earnings call

Black Hills Corporation heads into its Q1 earnings report tomorrow with short sellers at their most aggressive in months — yet the stock's options market is telling a calmer story.

Short interest has jumped sharply over the past five weeks. At 12.5% of the free float, shorts have added roughly three percentage points since early April, when the ratio sat near 9.3%. The move came in two distinct steps: a jump from ~9.3% to ~11.1% around April 9–10, then another leg higher to ~12.5% around April 23–24. That 33% monthly increase in short shares is unusually aggressive for a regulated utility — the ORTEX short score has settled at 60.4, reflecting the elevated positioning. Despite that, the borrow market remains remarkably relaxed. Availability is wide, cost-to-borrow runs at just 0.48% — cheap by any standard — and lending pool utilization is well below its 52-week peak of 22%. The setup reads as deliberate short positioning ahead of an event, not a squeeze-prone crowded trade.

Options traders, by contrast, are not hedging defensively. The put/call ratio has drifted down to 0.19, below its 20-day average of 0.20 and sitting nearer to the lower end of the past year's range. The z-score is slightly negative, meaning options flow has actually leaned bullish on net. That divergence is the key tension: shorts have been building steadily, while options players are positioned for the upside. One of the two crowds will be wrong after tomorrow's 15:00 UTC print.

The analyst community is cautiously constructive. BMO Capital raised its target from $84 to $91 in mid-April, reiterating Outperform — the most bullish recent move on the Street. B of A Securities lifted its target from $72 to $76 in early April while staying at Neutral, and Ladenburg Thalmann launched coverage at Buy with a $77 target on April 1. The consensus mean target is $83, against a current price of $73.84 — implying roughly 12% upside. One flag worth noting: the PE sits at 16.6x and the EV/EBITDA at 9.9x, both ticking lower over the past week as the stock pulled back. The forward EPS growth score ranks at the 86th percentile, while the dividend score reads a solid 72 — consistent with BKH's identity as a yield-oriented name.

Institutional ownership adds a further layer of context. BlackRock recently added over 800,000 shares, lifting its stake to nearly 16% of shares outstanding. Point72 and Adage Capital both built meaningful new positions in the prior quarter. That institutional buying backdrop sits in tension with the short-side buildup — larger investors are adding while event-driven shorts pile in ahead of results.

The two prior earnings reactions in the data were muted — a 0.07% move on April 29 and a 2.0% gain on April 2 — though both had small sample sizes. Tomorrow's report is the one to watch: the question is whether the recent sharp rise in short interest represents a fundamental view on guidance, or simply event-driven positioning that unwinds quickly once results are out.