Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

<ul>
<li>Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. </li>
<li>Liquidity shorts have built-in catalysts, have moderate to higher betas,  and can have strong down moves if a crisis develops.  They can go bankrupt, pushing the stock price near zero.</li>
<li>Today we are flagging Rivian, Nikola, ChargePoint, Domo &amp; Enviva.</li>
</ul>


Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. 
Liquidity shorts have built-in catalysts, have moderate to higher betas,  and can have strong down moves if a crisis develops.  They can go bankrupt, pushing the stock price near zero.
Today we are flagging Rivian, Nikola, ChargePoint, Domo &amp; Enviva.


Liquidity Risk Short Candidates: Rivian, Nikola, ChargePoint, Domo & Enviva

SPAC Deep Dive, subSPAC

subSPAC

SPAC Deep Dive

Each week we’ll identify and break down for you SPACs that are capturing market share and making an impact.

Equity Capital Markets

Opendoor Technologies / Equity Capital Markets

<ul>
<li>After a Boom that lasted nearly 18-month, SPACs are now finding themselves under fire.</li>
<li>Increasing amounts of Scrutiny from regulators, A Mismatch in Incentives towards Sponsors, and Burnout in new deals by Investors have all contributed to the recent slump.</li>
<li>A majority of the high-growth De-SPACs have already seen a sharp selloff, leading to a drop of between 40-60%.</li>
</ul>


After a Boom that lasted nearly 18-month, SPACs are now finding themselves under fire.
Increasing amounts of Scrutiny from regulators, A Mismatch in Incentives towards Sponsors, and Burnout in new deals by Investors have all contributed to the recent slump.
A majority of the high-growth De-SPACs have already seen a sharp selloff, leading to a drop of between 40-60%.


Event-Driven

<ul>
<li>Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. </li>
<li>Liquidity shorts have built-in catalysts, tend to have moderate to higher betas,  and can have strong down moves as the liquidity crisis gets closer in time. </li>
<li>They can also go bankrupt, pushing the stock price close to zero.</li>
</ul>


Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. 
Liquidity shorts have built-in catalysts, tend to have moderate to higher betas,  and can have strong down moves as the liquidity crisis gets closer in time. 
They can also go bankrupt, pushing the stock price close to zero.


Liquidity Risk Short Candidates: PureCycle, Atara Biothera, Nikola, Dutch Bros.

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

Headline Developments Coinbase (COIN) is under scrutiny from the SEC, receiving a subpoena from the regulator relating to its yield-generating product dubbed Lend (allowing users to earn double-digit yields on deposits of USDC on its platform).  According to a series of tweets from Coinbase CEO and co-founder Brian Armstrong (outlined below), he says that the SEC has refused to meet with the company, that they have complied with all requests and that the company’s door remains open for constructive discussions.

Headline Developments Coinbase (COIN) is under scrutiny from the SEC, receiving a subpoena from the regulator relating to its yield-generating product dubbed Lend (allowing users to earn double-digit yields on deposits of USDC on its platform).  According to a series of tweets from Coinbase CEO and co-founder Brian Armstrong (outlined below), he says that the SEC has refused to meet with the company, that they have complied with all requests and that the company’s door remains open for constructive discussions.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Back on the 31st March this year, the SGX <a href="https://api2.sgx.com/sites/default/files/2021-03/Consultation%20Paper%20on%20Proposed%20Listing%20Framework%20for%20Special%20Purpose%20Acquisition%20Companies.pdf" target="_blank" rel="noopener">announced</a> a regulatory framework for SPACs to list on the SGX. This followed a <a href="https://api2.sgx.com/sites/default/files/2018-09/Consultation%2BPaper%2Bon%2BProposed%2BRevisions%2Bto%2BMainboard%2BAdmission%2BCriteria%2Band%2Bthe%2BIntroduction%2Bof%2BSPAC.pdf" target="_blank" rel="noopener">consultation paper</a> over a decade earlier.
The feedback phase ended on the 28 April - there were 80 respondents - and unfazed by increased regulatory oversight on blank cheque companies in the US, the SGX <a href="https://www.sgx.com/media-centre/20210902-sgx-introduces-spac-listing-framework" target="_blank" rel="noopener">announced</a> a proposed listing framework yesterday.
The detailed paper is <a href="https://api2.sgx.com/sites/default/files/2021-09/Response%20Paper%20on%20Proposed%20Listing%20Framework%20for%20Special%20Purpose%20Acquisition%20Companies.pdf" target="_blank" rel="noopener">here</a>. 
The final framework mostly mirrors the March consultation paper, with the largest change being the abolishment of limits on the exercise of redemption rights by independent shareholders.
More below the fold.

Back on the 31st March this year, the SGX announced a regulatory framework for SPACs to list on the SGX. This followed a consultation paper over a decade earlier.
The feedback phase ended on the 28 April - there were 80 respondents - and unfazed by increased regulatory oversight on blank cheque companies in the US, the SGX announced a proposed listing framework yesterday.
The detailed paper is here. 
The final framework mostly mirrors the March consultation paper, with the largest change being the abolishment of limits on the exercise of redemption rights by independent shareholders.
More below the fold.

Green Light For SPAC Listings In Singapore

United States

Nikola Corporation operates as a zero-emissions transportation and infrastructure solution provider. The Company is a designer and manufacturer of battery-electric and hydrogen-electric vehicles, electric vehicle drivetrains, vehicle components, energy storage systems, and hydrogen fueling station infrastructure.

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Nikola Corp (NKLA US)

Liquidity Risk Short Candidates: Rivian, Nikola, ChargePoint, Domo & Enviva

Liquidity risk short candidates may not be economically viable given cash flows and capital requirements. This week we flag Rivian, Nikola,...

Eric Fernandez, CFA

Could SPACs Be a Contrarian Bet in 2022?

After a Boom that lasted nearly 18-month, SPACs are now finding themselves under fire. Increasing amounts of Scrutiny from regulators, A Mismatch...

subSPAC

Liquidity Risk Short Candidates: PureCycle, Atara Biothera, Nikola, Dutch Bros.

See model results and discussion on several liquidity risk short candidates: PureCycle Tech, Atara Biotherapeutics, Nikola Corp and Dutch Brothers,...

Eric Fernandez, CFA

Weekly Innovation Review (WIRE) #48

Headline Developments Coinbase (COIN) is under scrutiny from the SEC, receiving a subpoena from the regulator relating to its yield-generating...

Granite Bay Capital

Green Light For SPAC Listings In Singapore

A SPAC framework is a positive step for the bourse's attractiveness, so as to attract future listings, including secondary listings for home-grown...

David Blennerhassett

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