Video Summary: The last stand for oil patch contrarians as Encana insiders take on the short sellers

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Here is the video summary of the August 8th INK Morning report where we look at the competition between insiders and short sellers at Encana (ECA). Where would you place your bets right now?

INK Research and Canadian Insider are both subscriber-supported. We do not accept payments from issuers or promoters for stock coverage.


Short positions in multi-basin oil & gas operator Encana have been moving back up, hitting 1% of the stock's float at the end of July. Short positions increased not only as insiders have been buying, but also after the company bought back stock.

Over the past six months, insiders were net buyers of almost one million dollars worth of shares. On that basis, shorts seem to be pressing their luck.

On the other hand, since March 4th, the company has bought 149.4 million shares which is the full amount of the current repurchase program. With the program having run its course, shorts may feel emboldened.

On balance, the stock has a short-squeeze set-up based on our signals. But so far, the shorts are winning. What could help long investors?

Impressive Q2 results have not stopped the downward momentum. The company reported EPS of 24 US cents versus a loss a year ago. Cheap valuations are also not hurting the shorts. Encana is trading at a P/E of 3.5. With earnings and valuations of little help, it leads us to sentiment. Oil prices have been unable to make new highs. Until investors expect energy prices to move higher, the bearish mood towards the oil patch may persist.

In the meantime, Encana remains a contrarian opportunity for patient investors.

Our report which is not a recommendation to buy or sell securities is available through or the Canadian Insider Club.  Good luck friends and thanks for listening!

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