Optimism leading into July 18, 2024 for ToughBuilt Industries as it approaches OTC?New Update: The June 28, 2024 short data came out from NASDAQ and short interest has more than doubled to just over 300,000 shares. With the move to OTC on June 18, 2024 (market open), 1.4 million shares outstanding, and another 1.05 million warrants in the money, this could be a wild ride as shorts cover, or don't cover, and wait for resolution. $TBLT: Where did all the new shorts go? Short volume lower than I have seen in many months! ToughBuilt Industries: Confidently going into OTC! In the chart below, we plotted the last four trading days against short volume (Source FINRA), excluding 'excluded short volume.' This is calculated as total shorts (all exchanges) divided by total volume. We have seen this percentage fluctuate around 50% for all the months we are in this stock, with likely as many days above 50% as below. Thank you FINRA for the data. We do see very few shares available to short. Thank you shortables dot com for the data. Also, the cost to short stocks is far higher than it has been in the past, running around 100% of the price over the year. So, you pay for the stock anyway, so why short it? What is our hypothesis? 1. The stock is seeing lower volume, after a period of very high volume. It is possible that the 'short squeeze' crowd has accumulated the stock and is ready for a huge burst of price before the stock moves to OTC. This gives the 'pumpers and dumpers' a chance to exit their stock position with a gain while the stock is still on NASDAQ. Confidence: 10% 2. The stock has doubled the float since the offering, from 770 thousand shares to 1.4 million. There are an additional 1.05 million warrants that are near the money at current prices. Those warrants gave investors the chance to short the stock already, including naked shorts that will be covered with warrants. Maybe the shorts are already 'all in' and covered by warrants? Confidence: 50% 3. The uncertainty over the company's latest news on July 3, 2024 could have been priced into the stock via the shorting. The company's stock, in our opinion, is undervalued against fundamentals, assuming they are a going concern and continue to trade on NASDAQ. It is possible that the stock would have run much higher had the uncertainty around their board of directors and financial statements been absent. Confidence: 20% 4. The stock has been fully shorted already, and since June 20, 2024, based on the recent doubling of the stock price. Confidence: 20% Where do we go from here? We love the company and the company's stock. We think this stock undervalues the company and is trading at a significant discount given the history of dilution (which we think is behind us based on improving fundamentals), and the uncertainty over their financial reporting. The 'big date' of July 18, 2024 when the stock gets suspended from trading and delisted at market open puts a huge risk factor on this stock. We will be buying more, adding to our long position, after the uncertainty is behind us. We are an investment advisor, registered in Illinois. We sell investment advisory services for a fee, and offer an analysis of ToughBuilt, delivered by way of a two-hour conversation, for $250. We are non-discretionary investment advisors, so you pay us for our time, efforts and expertise, not based on how much money you invest.
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Stock Market BLOGJeffrey CohenPresident and Investment Advisor Representative Archives
January 2025
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