Disappearing Shorts: as Stocks Soar, Skeptics Surrender; Five stocks that have cratered this year; Action shots from World's Toughest Mudder
1) My advice to 99% of investors is to never short a stock.
But headlines like this sure make me think that, for the 1% who might do so, now is an excellent time! Disappearing Shorts: as Stocks Soar, Skeptics Surrender. Excerpt:
As the stock market has surged to records – unbowed by recession, pandemic or warnings of a dangerous bubble – activity has dwindled to a nearly two-decade low for the traders known as short sellers, who make their money betting stocks will fall.
This saddens nearly no one. From small-fry investors to members of Congress, critics paint short sellers as merchants of pain. People around the world celebrated early this year when GameStop's stock suddenly hurtled higher, causing billions of dollars in losses for short sellers. Many called it a long-due comeuppance.
But academics and short sellers themselves say they provide an important service suited for just this moment: pushing back against stock prices that may be rising too high, too fast.
2) Even in this frothy market, however, fundamentals still matter (sometimes). Five overhyped companies targeted by activist short sellers, all of which I've written about, have recently reported bad news and their stocks have tumbled...
a) Biotech firm Cassava Sciences (SAVA), which I wrote about on November 3, 4, and 5, tumbled 12% yesterday after it disclosed that "Certain government agencies have asked us to provide them with corporate information and documents."
b) The stock of electric vehicle ("EV") developer Lordstown Motors (RIDE), which I covered in March, May, June, and July, is down 81% from its peak earlier this year. The company recently reported dismal earnings, which activist short seller Nate Anderson of Hindenburg Research summarized in this tweet:
c) The Wall Street Journal reported that another EV maker, Workhorse (WKHS), which I covered in October and December 2020 and again in February, is being investigated by the Justice Department.
Though the stock is down 83% from its January peak, Fuzzy Panda Research still thinks it's a short: Workhorse Group: Active SEC Investigation + Fake Orders + Lost to Two EVs in USPS Bid + New EVs Already Breaking Down = Glue Factory for Workhorse.
Instead of these high-flying EV startups, my colleague Enrique Abeyta and I have been focused on a different corner of the electric and autonomous vehicle markets over the past two years. If you haven't watched it yet, here's the presentation I put together on Transportation as a Service ("TaaS"), which I think is coming much sooner than almost everyone expects.
d) Back in May, I recommended selling short shares of recycler PureCycle Technologies (PCT) in my Empire Investment Report newsletter. As of yesterday's close, we're up 29%. Anderson recently tweeted about the company, which is down 70% since its March peak:
e) Last but not least, the stock of trading app Robinhood (HOOD), which I wrote about twice in August and again in September, has been cut in half since its August peak. Here are two Wall Street Journal articles about the company's latest stumbles: Robinhood Hack Exposes Millions of Customer Names, Email Addresses and Robinhood Loses Out With Dogecoin in the Doghouse.
3) Tough Mudder had professional photographers on the World's Toughest Mudder course during the race this weekend and they caught some action shots of me, which I've posted on Facebook here. Here are a few:
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.