Ondas Tops the Short List, but That’s Not What Has Me Concerned
Here’s why I’m looking a little differently at this and another portfolio position.
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As November begins, I turn to Seeking Alpha’s list of heavily shorted stocks that could see heightened volatility. The latest screen of mid- to mega-cap companies shows 43 stocks with short interest above 20% of all outstanding shares. $10,000 Portfolio holding Ondas Inc. (ONDS) continues to lead the list with short interest of 44.5%. Nobody else is even close. Under Armour (UAA) is second at 32.7%.
The huge short interest does not really bother me. The stock could see a short squeeze at some point and that had helped me keep the faith. That said, those bears have been right so far. The stock has struggled badly since May, has sold off steadily since early August and is trading at its lowest levels in more than a calendar year.
Now, as this stock is a defense contractor, that becomes a liability. We know that U.S. forces need to restock. That’s not an issue. We know that drone warfare is here to stay for a bit. That’s not an issue. We did not see the size of the “blue wave” that changed the U.S. legislature for years to come being as deep blue as it was.
With the war in Iran being a driver of both this year’s spate of consumer-level inflation and President Trump’s lack of popularity, one would think that the environment over the next couple of years could get tough for defense contractors. Ondas will not be immune to that and as a smaller player, could be squeezed out of future contracts.
I am not about to act, as I just added to this long position yesterday (Tuesday), but the portfolio is overexposed for this environment. I will have to reduce the size of this position in the coming days or weeks.
Rocket Lab (RKLB) is another portfolio name now facing increased budgetary uncertainty. Just a heads up.
Wednesday’s Intentions
– Purchase one OCUL $9 Dec 18th call at $0.15 or better. Limited. (closes the options position)
Tuesday’s Intentions vs. Actual Trades
– Purchase 10 shares of ONDS at $5.90 or better. Limited.
– Bought 10 shares of ONDS at $5.69.
– Purchase one OCUL $9 Dec 18th call at $0.15 or better. Limited. (closes the options position)
– Nothing Done.
– Purchase one PL $17 Nov 19th call at $0.10 or better. Limited. (closes the options position)
– Bought one PL $17 Nov 19th call at $0.10.
Portfolio News
Peloton Interactive
On Wednesday morning, analyst Aneesha Sherman of Bernstein reiterated her “hold” rating on Peloton (PTON) as well as her $6 price target. Sherman is rated at one star out of five at TipRanks. She has compiled a 37% success rate over the past two years while generating an average return of -1.3%. Peloton is set to report ahead of the opening bell on Thursday (tomorrow).
Rocket Lab
On Wednesday morning, analyst Andres Sheppard of Cantor Fitzgerald reiterated his “buy” rating on Rocket Lab (RKLB) as well as his $122 price target. Sheppard is rated at three stars out of five at TipRanks. He has compiled a 37% success rate over the past two years while generating an average return of 3.3%.
On Wednesday morning, analyst Trevor J. Walsh of Citizens JMP reiterated his “buy” rating on RKLB but reduced his price target price to $90 from $130. Walsh is rated at five stars out of five at TipRanks. He has compiled a 68% success rate over the past two years while generating an average return of 63.8%.
Upcoming Portfolio Earnings
Aspen Aerogels (ASPN), Thursday, November 5th
Consensus: adjusted EPS of $-0.07 on revenue of $72.1M.
Peloton Interactive (PTON), Thursday, November 5th
Consensus: adjusted EPS of $0.13 on revenue of $552.7M.
Ocular Therapeutix (OCUL), Monday, November 9th
Consensus: adjusted EPS of $-0.35 on revenue of $14.3M.
Rocket Lab (RKLB), Monday, November 9th
Consensus: adjusted EPS of $-0.02 on revenue of $257.2M.
Evolv Technologies (EVLV), Tuesday, November 10th, Semper Fi
Consensus: adjusted EPS of $-0.02 on revenue of $45.6M.
Ondas Inc. (ONDS), Friday, November 13th
Consensus: adjusted EPS of $-0.09 on revenue of $148.1M.
Planet Labs (PL), on or close to December 10th
Consensus: adjusted EPS of $-0.03 on revenue of $104.5M.
Current Positions
Long 60 shares of ASPN at $5.1083. Target Price: $10. Last sale: $5.05.
Long 50 shares of EVLV at $5.33.92. Target Price: $7.50. Last sale: $4.78.
Long 170 shares of OCUL at $7.9692. Target Price: $12. Last sale: $7.05.
Short one OCUL $9 Dec 18th call at $0.80, Last sale: $0.20.
Long 320 shares of ONDS at $7.6374. Target Price: $12. Last sale: $5.71.
Long 110 shares of PL at $18.4543. Target Price: $20. Last sale: $13.48.
Long 70 shares of PTON at $5.0654. Target Price: $9. Last close: $5.61.
Long 14 shares of RKLB at $53.1907. Target Price $84. Last close: $54.17.
Long 125 shares of SOFI at $15.9644. Target Price: $24. Last close: $17.53.
Cash: $416.02.
Portfolio Value: $8,782.27, -12.2% from inception on March 24th.
At the time of publication, Guilfoyle was long ASPN, EVLV, OCUL, ONDS, PL, PTON, RKLB and SOFI.
