Activist Short Selling in W43

Activist Short Selling in W43
  • This week we have registered one new major short campaign. 
  • We saw Night Market Research come out with a report against International Battery Metals (IBAT), a $450m lithium extraction tech company due to allegations of dubious corporate governance, questionable claims and a broken business model. This is not the first lithium company targeted by activists. 
  • Lastly, we are tracking the most recent stock price gyrations at several previous targets. We feature a failed EV company which is trying to resurrect its share price and a mining company which is now just a few percentage points from being a clean zero. 

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  • Sad news from the world of activist shorts. 
  • An Activist Short Seller Gets His Day in Court (via NYT)

  • Another win for White Diamond Research and their microcap shorts. 

  • The heat continues to rise in the case of AVZ Minerals. Shares continue to be suspended. 

Big Movers

This week we saw several stocks that moved in the right direction for the short-sellers. Among the biggest movers was Core Scientific (CORZ), which dropped about 79% in the past week. This hosting and mining company was targeted by Culper Research due to allegations of dubious transactions and overvaluation.

Most importantly, the report believed the company went public by buying a bitcoin mining entity that was formed just a few months before CORZ acquired it. The management apparently tried to paint a favourable picture for the price tag, but the entity was initially funded with $58m and then bought for $1.46bn in seven months. This is allegedly dubious and creates significant questions about the transaction. 

The short thesis has played out. The stock is down 97%, and Culper was able to share the following update with the market. 

On the other side of the tracks, there were only a few meaningful movements against short-sellers. One of the most significant surges was seen in Mullen Automotive (MULN) which jumped 37% in the past week. Initially, it was Hindenburg who targeted this $651m EV company due to classic allegations of pump and dump scheme.

Most importantly, the report believed MULN's hyped solid-state battery tech is unlikely to generate much value. Recent PR, which talked about the performance, was apparently rehashed news from 2020. The testing partner also alleges that MULN misrepresented the results. MULN also apparently does not have the needed EPA certificate even to produce its own EV vans. 

The short thesis has definitely played out, as the stock was at one point down over 90%. However, it seems the market is now eager to give MULN a second change. The stock has started to rebound and is down 'only' 80% on the back of several seemingly positive developments and big retail investors focus. However, some caution that Hindenburg's allegations are still firmly in place and nothing changed. 

Another lithium target 

This week we also saw Night Market Research come out with a new short targeting International Battery Metals (IBAT). The activist targeted this $450m Canadian-based mining tech company due to allegations of dubious product and questionable corporate governance.

Most importantly, the report believes the company is unlikely to be able to finish its...

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* Note: Presented data and analytics is as of available on 2022-10-28 UTC 10:00.

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