PTQQF and IWM

Posted on January 26, 2021 by Aaron Warwick

I was contacted today by someone who has done well front-running additions to the Russell 2000/IWM (i.e. identifying stocks likely to be added and buying them ahead of the institutions who later will have to buy them in order to track the IWM). The person asked me if PTQQF was planning to uplist early this year to the NASDAQ (they have told me repeatedly that is their hope, and this month already began the application process).

In any case, I looked, and PTQQF is perhaps no more than 10% off the market cap requirement of being added. I still think they are massively undervalued and could possibly run 10% after their upcoming ER (this Friday 1/29). So if they clear that hurdle and get uplisted, they could very well be added to IWM this summer.

This is the ideal situation I noted when I first started covering the company. If they can get added to the IWM in 2021, it could lead to a real squeeze in a tightly traded stock. Since PTQQF currently is OTC, they will fly under the radar for most IWM arbitrage investors. The only reason my source knew about this possibility is because I pointed it out months ago and they happened to remember. So, what exactly is the hope here (note that this investment is not based on “hope,” but it *could* become lucrative quickly if the following scenario unfolds)?

PTQQF, over the next couple of months, rises 10-20%, meeting the market cap threshold to be added to IWM. PTQQF, over the next 3 months is added to the NASDAQ, thus meeting another IWM requirement. By that time, most of the arbitrage investors will have already bought the stocks they think will be added and will not be checking as regularly for new names. Then, in May, the Russell gives institutions a list of names being considered and PTQQF is on the list. Institutions will start “forced” buying in order to own PTQQF to track the Russell in their ETF funds. This “artificial” demand could lead to a short-term “squeeze” in the stock price, significantly rewarding investors ahead of the curve!

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