- This week we have registered three new major short campaigns and a number of follow up reports..
- J Capital released a report filled with strong allegations of fraudulent intent in a Chinese-based bitcoin miner. The stock decided to close more than 20% up on the day of the report.
- Lastly, we are tracking the most recent stock price gyrations at a struggling biotech, a cybersecurity business and a crypto-related fintech play.
Bits and Pieces
Shares of Solutions 30 plunged as much as 70% after auditor raised concerns. Solutions 30 is a short of Muddy Waters, Gladstone Capital and Adelphi Capital. UK's ShadowFall used this occasion to reflect on how the European investment landscape evolved since Wirecard’s collapse.
Blast from the past (Tech Pro Technology is a past short of GEO Investing and Glaucus Research):
The Hong Kong stock exchange passes judgment on the directors of Tech Pro Technology. This was one of the biggest stock blow ups in recent HK history. The penalty for the directors....24 hours of regulatory training. https://t.co/gy6KtMoRKy
— Benjamin Robertson (@BMMRobertson) May 26, 2021
- After being in focus of an extensive article "The Dark Money Secretly Bankrolling Activist Short-Sellers — and the Insiders Trying to Expose It" in November 2020, so called, balance-sheets behind activist shorts were again in focus in the past days:
I am still waiting for The Legal Authority that allows "One"to pay people to "Trash" stocks without disclosing your involvement.Have been waiting and still am waiting for the answer! @mcelarier why not ask the question or better yet write it! This will be in my letter to the SEC.
— Marc Cohodes (@AlderLaneeggs) May 26, 2021
- Shortbusters song spotted in this eventful week during which the OG meme stocks (AMC, GME, BB,...) made a big comeback:
#shortbusters to wrap the day
— Breakout Point (@BreakoutPoint) May 27, 2021
(h/t @SharesMagIan)pic.twitter.com/qtaiVQKf72
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Big Movers
This week’s we saw several stocks that moved in the right direction for the short-sellers. The biggest mover was Mountain Valley MD Holdings (MVMD) which is down more than 20% for the week. This biotech was initially targeted by Night Market Research due to allegations of rampant stock promotion and dubious business model.
Most importantly, the report believed the company's effort in developing a drug platform is nothing but a promotion to pump the share price. Allegedly, none of the insiders have any relevant work experience. Night Market found no evidence of any medical background when it comes to MVMD's lead scientist. Short seller also said that the company's only relevant asset is an 8-year old patent.
The stock has been in a persistent downtrend as the thesis seems to be playing out and is already down 65% since Night Market published their report. In the past week, the stock was likely weighed down further by what could have been a lacklustre investor event. There is not much chatter about the stock, but on Twitter, you could see that some were hoping that event would lift the share price. It did the exact opposite as on Thursday, the stock fell over 20%. While the short-seller already can call this campaign a success, the initial report talked about the stock as a potential zero.
Another stock that had interesting moves this week is Intrusion (INTZ). The shares were down about 7%, but have rebounded on Friday. This cybersecurity company was initially targeted by White Diamond 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 short-seller wrote an update this week with further claims of supposed misrepresentations such as the below.
$INTZ 3/6:
— White Diamond (@WhiteResearch) May 26, 2021
Blount said the award the company "won" was one of the "most prestigious and coveted in the world" with "tough competition". But the opposite is true - it's a marketing company that sold the "award" to INTZ.
$INTZ 4/6
— White Diamond (@WhiteResearch) May 26, 2021
Blount sent an email (attached) to an analyst claiming "All 50,000 seats are paid". Then in the earnings call, when asked how many seats are paid, Blount answered:
"we don't have the exact number of those that are paying today" pic.twitter.com/cHxuhSaXfF
White Diamond also lowered their price target from $4 per share to just $2.50 per share (currently $14 per share). Thus the thesis seems to be still in place and now offers even more downside. The stock is down about 47% since White Diamond's initial report.
On the other side of the tracks, we have seen some movements against the short-sellers. Most notable was Humbl (HMBL). This supposed fintech crypto play is up almost 80% in the past five days. HMBL is short of Hindenburg, who targeted the stock just last week due to allegations of dubious business model and operations.
Most importantly, the report believes the company has not been able to execute even its simplest tasks. For example, the users of the app still can't send or receive money through it. This is a problem given HMBL presentation of itself as a payment company.
The report was, as per usual, filled with strong claims, but it seems that the market shurgged them off so far. HMBL is somewhat popular among retail investors who shared their bullish takes on recent developments on Twitter and Reddit. This week was made easier by the company announcing new small financing of about $1.5m. Once the news got out, the stock started to run higher. This momentum seems to be holding so far.
The hustle continues?
This week we also saw J Capital Research target BIT Mining Limited (BTCM), a roughly $400m Chinese-based crypto company listed in the US. Just through this description, you might already know what is coming. The short-seller wrote about the business due to allegations of...
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* Note: Presented data and analytics is as of available on 2021-05-29 UTC 12:00.
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