Short Squeeze Momentum Stocks: GameStop $GME, Nano Dimension $NNDM, FireEye $FEYE
Published December 24, 2020 by Cedalion Advisor
In this post we highlight that we are bullish on 3 equities we classify as multi-year short suqeeze momentum trades: GameStop ($GME), Nano Dimension ($NNDM), and FireEye ($FEYE).
Why these companies? Each have broken a multi-year (sometimes > 5 years) downtrend and resistance. Each company has some sort of catalyst that has broken the downtrend. In $GME's case, it has garnered the interest from Chewy founder Ryan Cohen (now a >10% holder of $GME, continuing to buy at $16/share) and Dr. Mike Burry (profiled in The Big Short movie). For FireEye, it is the recent SolarWinds hack (ironically FireEye was the company implicated in this) that turned eyeballs to cybersecurity companies. NanoDimension, which had struggled for years with continued stock issuances, was added to 2 of ARK Invest's ETFs. To propel the momentum higher, "add fuel to the fire" if you will, each stock has a short interest of >10% (or 50% in the case of GameStop). We closely monitor shares available to short and borrow rates.
We also note that there is a significant amount of retail interest in these names in particular, as opposed to other heavily shorted, embattled companies such as Bed, Bath, & Beyond ($BBBY). We closely monitor trending Twitter/Facebook hashtags/cashtags, YouTube "guru" interest, presence in trading rooms, and other retail sentiment resources.