The BANG stocks (Blackberry (NYSE: BB), AMC Entertainment (NYSE: AMC), Nokia Inc. (NYSE: NOK), GameStop Corp (NYSE: GME) are experiencing wild price swings in recent days. GameStop is on a meteoric run up in price fueled by what CNBC called a “Reddit Rebellion.”
This retail investor movement translated into a 53% loss of investment in the month of January for Melvin Capital Management. According to the Wall Street Journal, its partner is none other than Citadel LLC. and fund manager Steven A. Cohen.
So when Robinhood CEO, Vlad Teneve, who has 13 million approved accounts goes on air saying that the move to restrict trading in the BANG stocks had nothing to do with pressure from Citadel which is responsible for at least 40% of their $271 million in order flow payments in the first half of 2020, few Robinhooder’s believe him. These investors are missing out that Robinhood did have a $1.0 billion raise just days ago to keep their net capital requirements in compliance from the explosion in value of their client accounts.
The investor rage is being fueled by WallStreetBets, which is a Reddit forum where the retail investors are hoping to fight back against the shorts through coordinated attacks. This massive retail raid on shorts seems to be working, and now there are hints that this mob of retail investors has another target in their sights.
Group Think on The Next Mark
The social decision to target these companies had a little to do with the demographics behind the people buying the stocks. The Robinhooder’s like video games and they like going to the movies and hated seeing the shorts dive bomb these companies into oblivion. Blackberry and Nokia are old tech darlings that had high short interest and were just targets of opportunity. In order to figure out who is next on their list you have to get into their mindset.
They are absolutely fed up with the handling of the pandemic and don’t understand why therapeutics aren’t front and center. They want to go out to bars again and socialize, but they realize that vaccines don’t take dying off the table nor do they stop the spread of the disease and they are low on the totem pole before they can get it. They understand that even the vaccinated can still spread the disease and that many of their friends are getting sick now and that the level of sickness is a function of the initial viral dose. Almost 20% of the new COVID-19 cases are 20 – 29-year-olds. There are no decent therapeutic options approved yet. Only a therapeutic that takes dying off the table is going to make a difference and if shorts are standing in the way of this the retail horde is going to take them out.
The Short Mafia
Biotechs are an easy target of the short mafia because 90% of all biotechs fail. That means that there is a 90% chance they are right if they bet it goes down. Pharma companies are in constant need of capital and that pressure to raise money almost always seems to lag the rate of development.
So when a short biotech analyst boasts about his track record of shorting you really have to take that with a grain of salt.
What value are they really adding?
Stat News reporter, Adam Feuerstein is believed by many to be the ring leader as he is known as “the most feared man in biotech.” He is however losing his relevance as he resorts to cyberbullying instead of actual analysis. Many of his pans are on the verge of approval. In fact 3 of Feuerensteins fab five could see approval in short order.
Right-hand man Andrew Left from Citron stunned people with his announcement that he will no longer be posting his short picks. Then almost confirming this move was Citron’s lieutenant Tim Sykes who made a specific announcement he wasn’t shorting CYDY. Only Feuerstein doubled down on his rhetoric and Buyers Strike has completely lost its firepower in a relentless January attack. The infrastructure of the shorts is crumbling which means they have very little firepower to keep stock down as they are being attacked on all fronts. This is why many in social media think the time to strike is now.
Then look at what happens one day later and a lot more social media attention. The short became a long.
For years Feuerstein refused to look at the science behind these 3 companies and that will be his undoing. It’s understandable why a person with a political science degree might not want to delve in, but focusing on making fun of CEO’s, and ridiculing the financing deals that he helped engineer due to his substandard analysis is hypocrisy at its highest level. Now Feuerstein finds himself in a position where he is holding on for dear life to save his band of short brothers, but he has an uphill battle.
Trial Results – 3 Nails For Feuerstein’s Journalistic Coffin
In the next quarter some of his top panned picks have top line data readouts. The first to hit will be CytoDyn Inc. (OTCMKTS: CYDY) with their eagerly awaited top line data from their phase 3 CD-12 severe to critical COVID-19. He’s hoping for a miss of the primary endpoint which is 28 day mortality but meeting any of the 3 mortality endpoints is almost an automatic approval. This will be the first strike. The next one is Cel-Sci Corporation (NASDAQ: CVM) with a top line readout in Head and Neck cancer for their phase 3 trial. They are looking to improve overall survival. This was a 9.5 year study that took 2.5 years longer than anticipated to get the deaths they needed to lock the trial. Since the standard of care hasn’t improved that typically means its working well and likely to meet its endpoint. The CEO of CVM tweeted this weekend
“I cannot sleep. I am so excited. Everything I have dreamt about is coming together. We made it to the finish line of our huge Phase 3 cancer study, just waiting for the final analysis. And, finally, the world is pushing back against the short sellers who almost destroyed $CVM
Since no timeline was given as to when they would come out with results this seems like a shot across the bow to the short sellers that a readout is imminent.
The final one to report should be Northwest Biotech (NASDAQ: NWBO) with their phase 3 Glioblastoma trial. They are in the same situation as CVM, the data is locked and they are waiting for the final trial results report which could come at any moment, but it is likely to come before the shareholder meeting in April. Positive results from any of these famous Feuerstein pans could mean the end of his career and him drifting off into the journalistic sunset. Struggle to Stay Relevant
Many articles have touched on Feuerstein’s relevancy. He just doesn’t pack the punch he used to and for the most part it’s his own doing. In the case of CYDY he attacked so frequently he lost his shock factor. Typically Feuerstein saved his pans for major top line readouts but in his struggle to find relevance he had to resort to cyber bullying tactics. Here are his latest 2 pots shots at the Feuerstein’s Fab Five. Honorable mentions go to Amerin Corporation (NASDAQ: AMRN), Allakos Inc. (NASDAQ: ALLK), Relief Therapeutics (OTCMKTS: RLFTF), Ligand Pharmaceuticals Inc. (NASDAQ: LGND), Aurinia (NASDAQ: AUPH).
The Short Attackers are Salivating
Throughout social media, the word is spreading that their next target is Feuerstein’s Short Mafia. The chat boards are in overdrive on Yahoo, Investors Hangout, Investorshub, Reddit, Stocktwits, and Twitter. They all seem to be pointing to a targeted short attack of Feuerstein’s Fab Five. Twitter influencers like Alexander Delarge are alerting their organizations.
He is not alone because Youtube influencers like TheLaptopLegend are starting to follow these stocks seeing the trends on Reddit. Last week stocks like NWBO and CVM got exponential buying bursts of activity that demonstrate a probing of the shorts defenses which appear to be undefended.
Top Target – CytoDyn
CytoDyn has one of the sexiest stories on the street. Friday, after the bell the company announced the initiation of sales in the Philippines. For years the shorts have been clamoring about no revenue and it looks like CytoDyn’s CEO finally took away their favorite piece of candy. This was only one part of the news, the other part was the shocking announcement that 100,000 doses of the drug was to be reserved for the Philippines and their partner Chiral Pharma Corp. The Manilla Times picked up on the story. There are currently only 250,000 doses ready to be shipped out of Samsung South Korea. This news puts the United States FDA in a pressure situation to approve the drug. In a webinar last week some of the country’s top doctors and regulators in the Philippines were educated on the Compassionate Special Permit (CSP) for leronlimab. CytoDyn also hinted that this was a stepping stone to an EUA and ultimately an approval in the philippines. The idea is that these compassionate use patients would fit the CD12 enrollment criteria for the extension trial and help get more data on the drug. The CEO Nader Pourhassen said
“The MHRA in the UK already asked us to immediately send the results to them. The head of the FDA in the United States requested to see the data as soon as it is unblinded without waiting for the top line report. They are very eager to get this.”
New investors to CYDY should realize how high the probability of approval is. The two major questions the FDA asks. Is it safe and does it work? The safety question is a resounding yes, because over 1000 patients have taken it without even one Severe Adverse Event (SAE). Efficacy is likely to be a blowout too because the Drug Safety Monitoring Committee (DSMC) looked at the study 3 times and each and every time they said to continue the study and that it was likely to meet its mortality endpoint of 28 day all cause mortality. There hasn’t even been one study in COVID-19 that has finished the clinical trial with their mortality endpoint intact. This is such an important point because even if they fail in a worst case scenario they are likely to get approval on one of the secondary endpoints.
It’s very clear that the head of the short mafia is in the cross hairs of the reddit rebellion. Feuerstein’s Fabulous Five Short picks seem destined for a meteoric rise as these WallStreetBets and Robinhood users muster their forces. This isn’t something that is going to happen overnight because CYDY, the focus stock, needs the catalyst of a NASDAQ listing. The Robinhood and Weebull investors cannot invest in an OTC stock, but some of these investors have started setting up accounts at the other discount brokers due to Robinhood’s newly enacted trading restrictions. A number of catalysts could set this next phase of the rebellion into motion. It’s pretty clear what’s coming, so investors may start leaking into this basket of stocks trying to get an edge on the impending avalanche of buying. The shorts may start to cover for fear they are going to get Gamestopped. The other variable is the media and their reporting. The Reddit attention may finally draw them into action where they want to talk about something other than the vaccine and big pharma. Perhaps a therapeutic for COVID-19, a shot that you take and feel better in 3 days without any side effects might finally become a story for the masses. Regardless of how it plays out the cast has been made and the short mafia is on the chopping block. The only question is the timing of the execution – no pun intended.
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Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. This article was written by a guest contributor and solely reflects his opinions.