Enbridge Inc's Declining Short Interest and Its Implications for 2026 Bullish Momentum

The stock of Enbridge Inc. (ENB) has witnessed a notable decline in short interest over the past year, raising questions about shifting market sentiment and the potential for bullish momentum in 2026. Short interest, a critical barometer of investor pessimism, has fallen from 31.05 million shares (1.42% of the float) in July 2025 to 14.11 million shares (0.65% of the float) by December 2025, according to data from FINRA and the NYSE. This reduction, coupled with a short interest ratio of 7.11 days to cover, suggests a moderation in bearish positioning, though institutional activity remains a nuanced factor in assessing future risks and opportunities.

Short Interest Trends and Market Sentiment

The decline in short interest reflects a broader shift in market sentiment. In July 2025, ENB's short interest ratio stood at 8.0, indicating a high level of pessimism among short sellers. By December, this ratio had fallen to 7.11, signaling a relative easing of bearish expectations. While the short interest ratio remains elevated compared to historical averages for utility stocks, the downward trajectory suggests that investors are becoming less convinced of a prolonged downturn. This trend aligns with broader macroeconomic factors, including stabilizing energy prices and improved investor confidence in the energy transition narrative, which has bolstered the sector.

Institutional Investor Activity: A Mixed Picture

While some investors, such as CUSHING ASSET MANAGEMENT LP dba NXG INVESTMENT MANAGEMENT, increased their short stakes by 66.3% in Q3 2025, others reduced their exposure. Major institutions like National Bank of Canada FI, Bank of America Corp DE, and Jane Street Group LLC have maintained short positions, but the overall reduction in short interest implies a net shift toward caution or even optimism. This divergence underscores the importance of monitoring institutional behavior, as large-scale covering of short positions could trigger a self-reinforcing rally in the stock.

Implications for 2026: Bullish Momentum and Short Squeeze Risk

The declining short interest raises the possibility of a short squeeze in 2026, particularly if ENB's stock price experiences upward momentum. A short squeeze occurs when short sellers, facing mounting losses as the stock rises, rush to buy shares to cover their positions, further driving up the price. While the current short interest ratio of 7.11 is moderate, it remains high enough to pose a risk if the stock outperforms expectations. For instance, a positive earnings report or favorable regulatory developments could catalyze a rapid reversal of bearish bets.

However, the risk of a short squeeze is tempered by the reduced scale of short positions. With only 0.65% of the float currently shorted, the potential for a dramatic squeeze is limited compared to scenarios where short interest exceeds 5% of the float. That said, the presence of institutional short positions-particularly those held by large players like Walleye Capital LLC and Squarepoint Ops LLC-means that even a modest price surge could prompt partial covering, amplifying upward pressure.

Conclusion: A Prudent Outlook for 2026

Enbridge's declining short interest reflects a nuanced shift in market sentiment, with bearish conviction waning but not entirely dissipating. For 2026, investors should balance optimism about the stock's potential with caution regarding residual short squeeze risks. The key will be monitoring both macroeconomic conditions and institutional activity. If ENB continues to outperform earnings expectations or benefits from policy tailwinds, the reduced short interest could amplify bullish momentum, creating a favorable environment for long-term investors.

In the end, the interplay between short interest dynamics and broader market forces will shape ENB's trajectory. For now, the data suggests that the bears are retreating, but the bulls must remain vigilant.