Activist Short Selling in W18

Activist Short Selling in W18
  • This week we have registered three new major short campaigns.
  • Perhaps the most successful one was by Hindenburg Research, who again added another win to their already storied track record. They are six for six this year with an average performance of -38%. 
  • We also look at the developments in Australia. JCap seemingly won a battle in the campaign against Nearmap as the company is sued for patent infringement. 
  • Lastly, we are tracking the most recent stock price gyrations at a cybersecurity company and a plastics recycling operation. 

Bits and Pieces

  • “The plan is to look for really fraudulent names, as well as ideas where we think there’s a strong accounting angle.” Short Seller Soren Aandahl Chases Targets With New Hedge Fund

  • r/wallstreetbets reaches 10 000 000 members

  • Shaping to be a year of exciting activist shorts comebacks, recently Bleecker Research returned and now:

Get most popular retail stocks. Track real time retail sentiment and popularity via our APIs and dashboards.

Big Movers

This week’s we saw several stocks that moved in the right direction for the short-sellers. One of the biggest movers was Intrusion (INTZ) which was down about 31% for the week. This cybersecurity company was targeted by White Diamond Research due to allegations of dubious product and questionable track record. 

Most importantly, the report believes the company's core new product is supposedly without any significant underlying intellectual property and is based on open-source tech, which is freely accessible. The beta test of the product was also done by associated parties with INTZ. The product documentation is apparently filled with buzzwords but leaves out any meaningful information. 

The company collapsed after releasing Q1 numbers, which disappointed, unable to show much-needed growth. Furthermore, White Diamond pointed out this quote from a sell-side report. 

Thus it seems there is still a downside opportunity as the company might struggle to keep up appearances. White Diamond initially saw a downside of more than 80%. Currently, the stock is down roughly 64% since the initial report. 

The second stock that also tanked was Danimer Scientific (DNMR), as it lost about 26% of its value in W18. Spruce Point targeted this plastic recycling stock due to allegations of dubious corporate governance. 

Most importantly, the report believes the company features several red flags connected to the company's insiders. The current CEO is tied to an entity involved in a potential cover-up of a deficient product. That entity also had troubles with accounting. The previous CEO of DNMR sued the company, and the alleged board of directors is controlling the whole enterprise. DNMR settled the suit. 

On Tuesday, Spruce released an update to their thesis and added claims of overstated production by the company, as can be seen below. 

The company issued a quick response and denied the allegations. They also said that they will be happy to provide an operational update on their upcoming conference call. 

On the other side of the tracks, we have not really seen so many major upward moves in tracked stocks. The 'biggest' mover was Credit Acceptance (CACC) was up by about 2%, but there was no significant news that would carry the stock other than the broader market action. CACC was initially targeted by Citron and later by Eisman. The core thesis was revolving around regulatory pressures. Both short-sellers believed the CFPB might press the company to reduce profits. So far, this trade has worked against them. The stock is up 22% since Eisman spoke about the short. 

Hard-hitting Hindenburg 

This week we also saw the short-seller behind many successful campaigns target Purecycle Technologies (PCT). Hindenburg wrote about this SPAC due to allegations of dubious business model and questionable track record of insiders.

Most importantly, the report believes the company is unlikely ever to generate much...

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* Note: Presented data and analytics is as of available on 2021-05-10 UTC 11:00.

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