South Bow Corporation heads into its May 8 earnings call with a sudden and material build in bearish positioning — the sharpest short interest spike the pipeline operator has seen in months.
Short sellers moved aggressively in the two days ending May 6. Short interest jumped 28% in a single session to 6.0% of the free float, representing roughly 12.5 million shares. That move extends a longer-running build: shorts have risen more than 50% over the past month, from a base of around 8.3 million shares in late March. The cost to borrow is modest at just over 1%, and availability in the lending market remains wide — meaning there is no mechanical constraint on new shorts entering ahead of the print. The stock itself has held up, gaining 4% over the past month to CAD 47.92, with a 3% bounce on the week, so this short build is running against a recovering price.
The bull case for South Bow rests on its infrastructure quality and dividend dependability. The company carries a dividend score in the 63rd percentile and has consistently beaten earnings estimates — its EPS surprise ranks in the 79th percentile. With an EV/EBITDA near 11.8x, the valuation is undemanding for a regulated pipeline business generating roughly $1B in EBITDA. The bear case centres on leverage: net debt is estimated near $4.8 billion against an enterprise value under $12 billion, and interest expense alone is running at roughly $323 million annually. A softening in throughput volumes or any guidance trim on free cash flow could stress the dividend cover narrative that underpins the stock's appeal.
The insider picture adds a layer of complexity. The 90-day net insider figure is positive — approximately $13.2 million net bought — but the composition matters. CEO Bevin Wirzba sold more than $5 million in shares in early March following equity awards, then turned around and bought 22,064 shares outright at CAD 45.32 days later. A director separately added 50,000 shares at CAD 34.23 in late March, a purchase worth roughly $1.7 million with no offsetting award. That pattern of open-market buying from both the CEO and a director, even as the stock has since rallied well above those entry levels, signals management comfort with the current trajectory. Close peers have had a rougher week: ENB fell 1% and TRP dropped nearly 1%, while PPL and GEI shed 3% and more — making SOBO's 3% weekly gain a relative outperformer within Canadian pipeline infrastructure.
The Q1 print is therefore less about proving growth and more about whether South Bow can reaffirm its dividend and cash flow guidance in a way that justifies the stock's recent outperformance against sector peers — and explains why short sellers are now building positions at a pace the lending market has not seen this year.
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