SI data that just got updated today now shows only 7% SI of the float. This means there’s only about 309K short shares not yet returned. It seems that shorts gradually covered over the past 15 days and this decreases the chance of a short squeeze. Still ranked #29 on fintel but that may change tomorrow. Still at 2 days to cover since since volume was only 150k today. With a tiny float, it can rocket again.
Preface: This is not financial advice of course. Do your own DD. But I noticed this ticker APVO (Aptevo) ranked #29 on Fintel’s short squeeze leaderboard. Was as high as #10 last week. Have a starter position in this at sub $8. There’s no options on this one so price manipulation is more limited.
Intro: Recently like r/squeezeplays, I’ve been scanning for tickers with low cap, small float, and lower than avg volume that are consolidating after a squeeze or recent “buy the hype sell the news” cycle. This one is consolidating with less than 1M daily volume for the last 12 trading days. Average volume over this period is actually around 400K. A few days were even under 300k so there could be some issues getting filled but a surge in volume could full send this mf no doubt. The volume might trigger a PnD but understand the last spike was due to groundbreaking news from the company. Will get to that later.
Squeeze Data: Marketwatch shows a tiny float of 4.56M with SI of the float at 24.48%. Fintel shows 26% SI of the float and 3.5 days to cover. But using Marketwatch, that’s still 1.12M shares shorted which puts days to cover well over 2 days based on the low volume in the last couple weeks. IBD shows 22.3% CTB with 150k shares left to borrow (down from high of 250k last week), if shorts double down, it will provide more liquidity to bulls to form a bear trap and further slingshot this up. The craziest part is there’s an outstanding 453K FTDs coming up due 12/31 based on T+35 settlement. These were naked shorts from the 11/26 dead cat bounce at $12 just 2 days after the big run up to $22 where they first got burned. If this break $12 before 12/31… shorts are more than fucked. Even now, they are still shorting this thing… Just on 12/22, short volume was over 51% of the daily trading volume. On 12/23, short vol was 40%. But they are getting greedy af beating down a good company for no reason.
Insider Trading: Activity last 12 month appears bearish at first until you dig deeper. Every share Kevin Tang sold were picked up by his biotech investment firm Tang Capital. Reminds me of when Ryan Cohen transferred all his GME shares to RC Ventures. The other 150K buy by the director is actually just a disposition. On the Form 4, it shows it’s just transferring from his name to his family trust. At the end of the day, insiders are NOT selling. They HODL’d through the run to $22 recently so that’s super bullish to me. Or dumb… maybe they should have scaled out lmao.
Institutional Holdings: Tutes own almost 56% of the outstanding shares. The biggest holder Tang Capital referenced above holds 1.76M shares alone. Vanguard holds 135k shares. Blackrock holds 55k shares. Overall, tutes have held or increased their positions by 2.3M shares vs unloading only about 428k. Tutes transactions were 85% long. The amount of tutes holding theoretically reduces the size of the free float that will be traded during a squeeze which will cause further liquidity issues for shorts trying to locate shares.
Price Targets: My own PT is $14 but do whatever you want. $14 is about where the dead cat bounce happened on 11/26. The stock has been beaten down and consolidating between $7-$8 past couple weeks so now is the perfect time to enter imo. 52 week low is $6.38 so there’s a limited 18% downside risk by setting SL there when entering at close price of $7.87. However, dropping to $7, the lower end of consolidation, actually limits risk to just a 11% loss. First region to claim is $9 (+12.5%) and then $10 (+27%) psychologically. Then it’s straight shot to $14 (+77%) after breaking double digits. If everything goes perfect, this hits next most recent high of $22 (~180%) which happened on 11/23 when news of clinical update for the company’s Phase 1b Expansion trial evaluating APVO436 in the treatment of acute myeloid leukemia (AML). Preliminary data observed to date includes one complete remission. For smooth brains, complete remission means all signs of cancer are gone which is a big fucking deal. This was also after only one cycle of therapy. The patient also tolerated treatment without evidence of overt toxicity. Lastly, 2 analysts gave this a buy rating with an average price target of $52.50. No wonder so many institutions are long.
Company Pipeline: In addition to their main therapy currently in phase 1 trial that already reported great results, the company also has 4 other therapies in pre-clinical stages. 1 therapy has been selected by LLS (Leukemia and Lymphoma Society) to enter a phase 1 clinical trial in 2022. This is your typical biotech/pharma that burns cash through heavy RnD (net loss ~7M last quarter) but it’s not a trash company by any means. They’re actually sitting on plenty of products in development plus cash so I see very low chance of the “O” word.
Dilution Risk: Very Low. Q3 earnings report in September stated “Aptevo had cash and cash equivalents as of September 30, 2021 totaling $53.4 million, including restricted cash of $1.3 million. The restricted cash is expected to be released over the next twelve months.” This amount is greater than their current market cap. CEO even said: “We are well funded to continue our work for the next twelve months and look forward to reporting our progress.” Imo, I don’t see an offering happening if there is another run because they simply do not need it right now.
TLDR; FTDs due by 12/31 will take more than a day to cover. Total shorted shares will take 3+ days to cover given current volume last 12 days. Since more than half the outstanding shares are held by institutions, the practical free float is closer to ~2.5M. Low chance of dilution (they could have done an offering at $22 or $14 but they didn’t).
All this data is brewing a perfect storm for shorts to be in a serious liquidity crisis once the stock starts climbing again. Seems like a good bet to enter now to play for the FTDs to be covered by 12/31. But even abnormal volume will send this up. And I saved the highest upside for last… APVO has had an AMC/SPRT-like squeeze before running from about $6 to $60 in just 5 days (peep at 11/2/2020-11/9/2020). This happened a year ago and it was before the memestocks rally! So the squeeze potential here is massive with $60 being the moon target. That’s a maximum 650% gain with 11% downside back to consolidation.
This article was written by u/steve2bacon.