Posted on December 14, 2021 by Scott Shuda
A Bloomberg article dated December 10, 2021 is read in the YouTube channel of Stocks Galore. I’ve not seen this way of sharing content before, and am unsure about the legality of such approach, but the content is good and readily accessible. The article details how the Department of Justice is investigating potential market manipulation and coordination by short selling firms. Included in the discussion is the practice of practiced anonymity by many practitioners.
The subject is of interest to me due to two recent short attacks targeting companies of interest to me and in my portfolio. The first attack, written about here, was launched on October 26, 2021 against MP Material (MP) by Grizzly Research. It knocked the stock down for a couple of days, but that was short-lived and the stock has since rallied, foing from a mid-day low near $30 to a recent high near $50.
The second attack, written about here, was launched on December 10, 2021 against Technoglass (TGLS) by Hindenburg Research. In the three trading days since, the stock has remained depressed, trading around $21, after falling from recent highs around $34.
Myself, I believe it quite reasonable for the DOJ to be looking into short-selling practices. Do calculated hits on these companies, forcing cautious investors to flee until the dust settles really benefit investors and markets? Or, more likely, is the purpose to benefit and win quick profits for the short-seller. The short attack on MP was quickly rejected by the market, and it is almost certain the short sellers traded out of their position, taking the money and running with barely a look back. Given my recent interest in short-selling activities, forced upon my by Grizzly and Hindenburg, I’ll keep an eye on the topic and perhaps share more articles in the future.
Disclosure: I am long TGLS and might buy or sell shares at any time.