Short Analysis 6/7/2017 77% of Sales Short Today - Squeeze En Route
Shorts sales were 77% of sales today suggesting shorts continue to grasp at straws and are fighting a wave that is seeing them likely selling into the hands of institutions, which of course decreases the float (strong hands) and increases the likelihood of a material squeeze on news. For the last 2 weeks we have averaged well above 60% daily shorting (as a percent of sales) and today was no different.
This is the highest level of daily shorting I have seen since Kerrisdale’s short and distort report and eclipses the 74% of sales we saw last week. The situation for shorts appears to be getting desperate by the day, and they are piling on to slow upward movement as NO ONE is selling. Only 394k shares were sold by longs today (1.731 mil sales-1.337 short sales = 394k)
Today and yesterday would have added a minimum of 2 mil shares short to the short interest, as such our estimate is now 30 mil shares short of NAK alone plus NDM which we have to find numbers for).
Buying continued to outpace sales again (4th day in a row), including yesterday even though we saw a 6% drop (1.94 mil buys vs 1.73 Mil sales)
Dark Pool activity (institutional activity) continues to be strong with 617K traded – Over 2.7 mil shares in the Dark pools over the last 3 trading days. Shorts appear to be assisting institutions in getting cheaper shares and trading into their hands. Institutions don't just purchase in dark pools, they do so on exchanges as well.
Short Analysis (Mil)
Volume 4.305 Mil
Buys 1.954 Mil
Sales 1.731 Mil
DPools 0.617 Mil
Short 1.337 Mil
Short % of Sales 77% (1.337/1.731)
Source: Short Data- Nakedshortreport.com / Trade Data- IHUB
It is hard to comprehend what shorts are theorizing here other than their hubris won’t let them cover, or something more nefarious like an wealthy activist shorting the stock, as on financial terms , the decision to stay short here given the fact pattern of information, who is buying, the decrease in the float, suggests an illogical play and high risk / loss potential.
There are many other ‘better’ short plays out in the market, and as such, the irrationality of shorts here is confusing but I suppose we saw that with STRP as well (yet another Kerrisdale FAIL that many are aware of).
However, I do not believe this is ‘smart’ money. No Hedge Fund would be shorting at this stage (unless hedged with calls and open interest is not material enough to suggest that), so perhaps it is a lot of naked shorting by MM’s hoping they can cover later, leave their position open but that typically only works with companies with very little to no ‘real value’ ie P&D.
As we know, $300-400bn in value in the ground is not a P&D (contrary to what many bashers want people to believe). It is possible that naked shorting is the reason, that MMs misread this company as a ‘typical’ penny stock and are now caught. An interesting situation for shorts to say the least.
All in all, a decent day as a solid base is being formed at 1.68-1.70 and the long term chart is bullish.
Remember focus on value, not price, stop worrying about pennies and hold your shares. Value will be recognized here eventually, and when it does, you want to be in this stock, not on the sidelines!
Keep the faith!
