On the 20/Dec/2020, I received an email from a subscriber, part of which I was asked “If you could own just one tech stock under $20 which one would it be?”
There are many promising technology stocks under $20 at all time and at that time I replied with a recommendation of tech stocks that I believe will take off long term.
And just before I typed the last paragraph of my reply, I added that “Ocean Power Technologies is a stock I recommend you keep an eye on, it’s currently under $10, because I expect the renewable energy sector to grow significantly next year. So keep an eye on Ocean Power Technologies. I still have issues with it’s financial, however I’ll give it two quarters next year and see how it performs.”
Weeks later I took a ‘small’ long position on Ocean Power Technologies (OPTT), fundamentally to enable me keep a ‘very close’ eyes on the stock.
As renewable energy stocks got more popular and attractive, I watched OPTT rise week after week, then something happened.
Yesterday (21/01/2021), OPTT rose 24%, trading volume spiked significantly, and I got an idea: Short this stock.
Back in December I wasn’t satisfied with the valuation of the stock and its performance as a business, what in The Name of the Stock Market will make me be okay with a valuation that 2x while performance remained the same? Nothing.
Seeing that trading volume spiked unusually high, I knew something was smelling, pump and dump was smelling, I looked at my reserved cash (which was over 30% of my portfolio) and jumped over to the other side of the trade. And the jump was a massive jump.
Before the market closed yesterday, the stock had dropped more than 10% from a 24% high. I covered my short position and added an easy 10% to my reserved cash.
Today (22/01/2020), the stock spiked again, this time up to 12%, hungry for more, I took another short position.
The stock is now up 33%. The short squeezers were on their A game today. Turns out a similar party was going on another street (GameStop).
Nonetheless, the stock kept spiking and I keep increasing my position, trading volume spiked from an average of 8,160,037 to over 45,000,000.
Ocean Power Technologies (OPTT) is rising non-stop. And I’m losing lots of money non-stop, even as I continue increasing my short position.
It’s no longer about the company’s fundamentals …
It’s now a trading war …
Long Vs Short
And I’m currently on the side losing the battle.
However, for a company like OPTT, one thing is certain: It’ll eventually fall hard when the pumpers run out of steam.
At least I hope so.
Henry John is a Stock Portfolio Manager that focuses on companies developing cutting-edge technologies.
Keeping track of cutting-edge techs, companies and stocks is what I do almost everyday. And I love it. Whether it’s artificial intelligence, 5g, or autonomous vehicles; I’m all in.
I’m a self-made millionaire who made most of his money investing in technology companies while working in finance.
Yes! I owe it all to tech and finance.