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5 Stocks with Short Interest Over 40%: Possible Short Squeeze Plays

by Fred Fuld III

Did you know that at one point, GameStop (GME), the high flying meme stock, had 140% of its total outstanding shares shorted, according to the book, The Antisocial Network (now republished as Dumb Money).

It is possible for a stock to have a short interest exceeding 100% of its outstanding shares. However, this is relatively rare and can occur due to several factors:

1. Naked Short Selling: This illegal practice involves selling borrowed shares without first locating them. While most brokers have safeguards to prevent naked short selling, it can still happen, especially with less-regulated stocks. In such cases, the number of shorted shares can temporarily exceed the number of outstanding shares.

2. Share Lending and Relending: When shares are borrowed for short selling, they can be re-lent to other short sellers multiple times. This can create a situation where the total number of shorted shares appears to be more than the number of outstanding shares, even though no naked short selling has occurred.

3. Synthetic Short Positions: These positions involve using derivatives like options or futures contracts to mimic the effect of short selling. While not directly borrowing shares, these positions can still contribute to the overall short interest and push it above 100%.

It is probably the lending and relending that contributed the most to GameStop short interest going over 100%.

A short squeeze is a phenomenon that occurs in financial markets when investors who have sold shares of a stock short (i.e., betting that the stock price will fall) are forced to buy those shares back at a higher price than they expected. This can happen when the stock’s price rises sharply, causing losses for short sellers who need to buy the stock to cover their position and limit their losses.

As more and more short sellers try to buy the stock to close out their positions, this increased buying activity can drive the stock price even higher, creating a feedback loop that can lead to a rapid and dramatic increase in price. This can create a challenging situation for short sellers, who may be forced to buy back the stock at a loss, or risk even greater losses if the stock continues to rise. A short squeeze can also create opportunities for long investors who have purchased the stock, as they may be able to sell their shares at a higher price to short sellers looking to cover their positions.

When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short sellers can be profitable, but sometimes when the stock moves against them, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase/Decrease ~ This is the percentage increase in in the number of short sellers from the previous month.

The following are some heavily shorted stocks that have short interest above 40%.

Company	Symbol	Short Interest	Float	Outstd	S. I. Ratio	% chg from prev month
Fisker Inc	FSR	47.28%	199.17M	218.20M	4.5	4%
Novavax Inc	NVAX	43.94%	111.96M	118.79M	6.5	8%
Upstart Holdings Inc	UPST	41.91%	72.37M	85.06M	3.5	-1%
Beyond Meat Inc	BYND	40.09%	60.86M	64.54M	8.2	-5%
Carvana Co	CVNA	40.04%	94.11M	106.54M	4.3	8%

The second stock on the list, Novavax (NVAX) has almost 44% of its float shorted, with an 8% increase in short interest over last month.

The short interest ratio is 6.5, which means that it would take the short sellers over six days to cover their position, based on recent average volume.

Just keep in mind that just because a stock has good short interest ratios and is heavily shorted, doesn’t mean that the stock will go up, especially in a bear market.

In addition, the short positions and other data can change at any time.

Also, stocks that are significantly shorted may up being just lemons.

Disclosure: Author didn’t own any of the above at the time the article was written.

What is the RMD and Why Should You Care If You’re Over 70

by Fred Fuld III

The Required Minimum Distribution (RMD) is the minimum amount you must withdraw from your traditional IRA or employer-sponsored retirement accounts each year, starting at a certain age. It’s essentially a way to prevent retirement savings from growing indefinitely tax-deferred, ensuring the government collects its share of the money eventually.

Here’s why RMDs are important:

Avoiding penalties: Failing to take your RMDs by the deadline results in a hefty penalty of 50% of the undistributed amount. That’s a significant chunk of your retirement savings potentially going to the IRS instead of you.
Planning for income: Knowing your RMD amount helps you plan your budget in retirement. You can factor it in when estimating your income and making spending decisions.
Managing taxes: Taking RMDs allows you to spread out the tax burden on your retirement savings over multiple years, potentially reducing your overall tax liability.

Here are some key things to remember about RMDs:

The RMD age is currently 73, having recently increased from 72 due to the SECURE Act 2.0.
The first RMD can be delayed until April 1 of the following year, but all subsequent RMDs must be taken by December 31st.
The RMD amount is calculated based on a formula that considers your account balance and your life expectancy. Several online calculators can help you estimate your RMD.

It’s crucial to consult with an accountant or financial advisor if you have any questions or concerns about RMDs. They can help you understand your specific situation and ensure you’re taking the right steps to comply with IRS regulations and maximize your retirement income.

Schwab has a calculator that can determine how much you need to withdraw for your RMD, based on your date of birth, account balance, and other information.

Remember, 50% is a huge penalty, so make sure you withdraw it correctly.

Top Cell Tower Stocks

by Fred Fuld III

You may have seen an ad on TV recently from one of the major telephone companies, bragging about how they DON’T own cell towers in order to provide the consumers with lower costs and better service.

So what’s that all about?

Are there investment opportunities in the cell tower industry?

The cell tower industry, often referred to as the wireless infrastructure sector, plays a crucial role in enabling our ever-expanding mobile connectivity. It’s the backbone of the cellular networks that keep us connected on our phones, tablets, and laptops, providing the physical foundation for calls, texts, data transmission, and even emerging technologies like 5G.

At the core of the industry are the tower companies, who own and operate the physical cell towers. These companies lease space on their towers to mobile network operators [MNOs] like Verizon (VZ), AT&T (T), and T-Mobile (TMUS), who then install their own equipment to broadcast their signals. This allows MNOs to provide coverage to their subscribers in various locations, from bustling cities to remote rural areas.

The cell tower industry is a multi-billion dollar sector, driven by the ever-increasing demand for mobile data. As more and more devices connect to the internet, and as we rely on our phones for more aspects of our lives, the need for reliable and widespread coverage grows. This, in turn, fuels the demand for more cell towers and infrastructure upgrades.

The industry is also constantly evolving, with the deployment of 5G technology being a major driver of change. 5G requires a denser network of cell towers and small cell installations to deliver its promised ultra-fast speeds and low latency. This is opening up new opportunities for tower companies and creating fresh challenges in terms of network planning and deployment.

The cell tower industry is a vital but often unseen sector that underpins our mobile world. As our reliance on mobile technology continues to grow, the industry is sure to play an even more critical role in ensuring that we stay connected, informed, and entertained.

American Tower Corporation (AMT) is the largest real estate investment trust focused on owning, operating, and leasing wireless communications infrastructure.

Imagine a silent landlord for the cell towers that keep your phone buzzing – that’s ATC in a nutshell. They own and operate a whopping 225,000 communications sites across a staggering 25 countries, making them the world’s biggest independent owner of these crucial towers.

American Tower Corporation’s role in the cell tower industry is crucial, as it provides the backbone infrastructure that supports wireless communication, enabling people around the world to stay connected and access mobile services. With its strong market position, global presence, and focus on emerging technologies, ATC continues to play a significant role in shaping the future of wireless communication networks.

The stock, with a market cap of $95.5 billion, trades at 136 times trailing earnings and 44 times forward earnings. It pays an annual dividend yield of 3.33%.

Crown Castle International (CCI) stands tall as a Real Estate Investment Trust (REIT) in the realm of wireless infrastructure, boasting a crown jewel portfolio of over 40,000 cell towers, 115,000 small cell nodes, and an impressive 85,000 route miles of fiber – blanketing major US markets. From a strictly investment perspective, let’s delve into the kingdom of CCI and assess its potential for your portfolio.

A Moated Stronghold: Crown Castle’s moat lies in its dominant market position. As the largest tower operator in the US, they wield significant bargaining power with mobile network operators (MNOs) like Verizon, AT&T, and T-Mobile. These MNOs are constantly vying for space on CCI’s towers to cater to the insatiable demand for mobile data, leading to stable and predictable long-term lease agreements for Crown Castle. This translates to consistent rental income for investors, a cornerstone of REIT appeal.

Golden Growth Prospects: The ascent of 5G paints a golden picture for CCI’s future. This next-generation wireless technology requires a denser network of smaller cell installations – an arena where Crown Castle is rapidly expanding. Their strategic acquisitions of fiber assets and small cell providers position them to capitalize on this multi-billion dollar opportunity, potentially fueling dividend growth for investors in the years to come.

The stock, which has a market cap of $47.1 billion, has a trailing price to earnings ratio of 30 and a forward P/E of 31. The company pays a generous yield of 5.8%.

There are a few other smaller players in the cell tower arena, such as SBA Communications (SBAC), with a market cap of $25 billion.

However, if you want diversification, you might want to consider a cell tower ETF.

Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR) yields 3.68%.

Defiance 5G Next Gen Connectivity ETF (FIVG) has a yield of 1.4%.

Just remember, the dominant position, predictable income, and growth potential in the 5G era offer a compelling proposition. However, navigating the regulatory landscape and the ever-evolving telecom market requires a keen eye and a well-balanced portfolio.

Disclosure: Author didn’t own any of the above at the time the article was written.

You can now SELL YOUR VOTES

by Fred Fuld III

I am surprised that there isn’t a law about this. There is a company that provides a vote exchange where you can buy or sell votes.

It is for shareholders of publicly traded companies. The company is called Shareholder Vote Exchange.

The service allows shareholders to sell the rights to the proxy votes of stocks in order to generate additional income.

Companies and activists are the usual buyers.

For example, if you own 1000 shares of Apple (AAPL), you could sell your voting rights for $187.44 to $9,372.00 per year, depending on various factors.

For 1000 shares of Disney (DIS), it would be $91.07 to $4,553.50.

You don’t need 1000 shares, You could sell your votes for 100 or 10 shares, or even 1 share.

For example, if you own 100 shares of Tesla (TSLA), your votes could be sold for anywhere between $22.37 to $1,118.55.

If you had 100 shares of Meta/Facebook (META), you might get $33.50 to $1,675.20 each year.

Here’s a summary of the Shareholder Vote Exchange:

What they do:

SVX enables shareholders to buy, sell, and trade their voting rights for upcoming company meetings on their online platform. This allows passive investors who are not interested in voting to monetize their votes, while also giving activist investors and companies a way to acquire additional voting power.

Key features:

Unique auction system: SVX uses a proprietary auction system designed to optimize value for both vote sellers and buyers.
Integration with major brokers: The platform is integrated with major brokers like Schwab and Vanguard,making it easy for shareholders to participate.
Regulatory compliance: SVX’s auctions comply with all applicable state and federal regulations, ensuring transparency and investor protection.

Benefits for shareholders:

Monetize voting rights: Shareholders can earn cash for their votes, even if they are not interested in voting themselves.
Increase liquidity: The SVX platform provides a market for votes, which can make it easier for shareholders to buy and sell them.
Participate in corporate governance: Shareholders can use the platform to express their views on important company matters, even if they cannot attend shareholder meetings in person.

Current status:

SVX is a relatively new company, but it has already attracted a significant amount of interest from investors and the media.
The company is currently in the process of expanding its operations and adding new features to its platform.

Potential impact:

SVX has the potential to revolutionize the way shareholder voting works. By making it easier for shareholders to buy and sell their votes, the platform could increase shareholder participation in corporate governance and make it more difficult for companies to ignore the interests of their investors.

Now with votes for political candidates, it is illegal to buy or sell a vote, according to 18 U.S. Code § 597 – Expenditures to influence voting.

But that hasn’t stopped people from trying.

Back in the year 2000, some people tried to sell their votes on eBay (EBAY).

Anyway, it will be interesting to see what happens with these shareholder votes.

Disclosure: Author is long AAPL, DIS, and EBAY, and is short TSLA.

Monthly Dividend Business Development Companies Paying Over 9%

by Fred Fuld III

A business development company (BDC) is a type of financial institution that specializes in providing financing to small and medium-sized businesses (SMBs). They do this by raising capital from investors, typically through issuing stocks or bonds, and then using that money to make loans or investments in private companies.

Here are some key things to know about BDCs:

Focus on SMBs: BDCs primarily focus on providing financing to SMBs that may not be able to easily access traditional bank loans or other forms of debt. This could be due to a variety of factors, such as the company’s size, stage of development, or credit history.
Debt and equity investments: BDCs can make both debt and equity investments in companies. Debt investments typically involve providing a loan to the company, while equity investments involve buying a ownership stake in the company.
High yields: BDCs are known for offering high dividend yields to their investors. This is because they are required to distribute 90% of their taxable income to shareholders each year. However, it is important to note that BDC investments are also considered relatively risky.
Publicly traded: Many BDCs are publicly traded companies, which means that their shares can be bought and sold on stock exchanges. This makes them more accessible to a wider range of investors than private equity funds or venture capital firms.

BDCs play an important role in the economy by providing financing to growing businesses that may not be able to obtain it from traditional lenders. This can help to create jobs and boost economic growth.

The following BDCs pay dividend yields of more than 9% and pay their dividends monthly:

Horizon Technology Finance (HRZN), which has a yield of 9.71%.

Horizon Technology Finance Corporation, established in 2003 and headquartered in Farmington, Connecticut, is a specialty finance company with a focus on providing capital and financing solutions to venture capital and private equity-backed companies. The industries targeted by Horizon Technology Finance include technology, life sciences, healthcare information and services, and sustainability.

The company’s core services revolve around venture debt financing, offering loans to support the growth and development of technology and life sciences companies. In addition to debt financing, Horizon Technology Finance may engage in equity investments, participating alongside its debt offerings. The company actively manages a portfolio of investments in various stages, ranging from early-stage to expansion-stage and late-stage companies.

Pennant Park Floating Rate Capital (PFLT) yields 9.75%.

PennantPark Floating Rate Capital Ltd. is a specialty finance company that operates as a closed-end, non-diversified investment company. It is publicly traded and focuses on providing customized financing solutions primarily to middle-market companies. The company’s investment strategy centers around investing in floating rate loans and other investments in the form of senior secured loans, mezzanine debt, and equity investments.

Headquartered in New York, PennantPark Floating Rate Capital seeks to generate current income while preserving capital through its investment activities. As of my last knowledge update in January 2022, the company primarily targets companies operating in various industries, including healthcare, industrial manufacturing, automotive, technology, energy, and other sectors.

PennantPark Floating Rate Capital’s portfolio is diversified across multiple industries and consists of investments in debt and equity securities. The focus on floating rate loans provides the company with the potential for income generation in a rising interest rate environment.

The company is managed by PennantPark Investment Advisers, LLC, a registered investment adviser with expertise in credit and private equity markets. The management team is responsible for implementing the company’s investment strategy and making decisions aimed at optimizing returns for shareholders.

Prospect Capital (PSEC) pays an extremely high yield of 11.63%.

Prospect Capital Corporation is a business development company (BDC) that operates as a closed-end investment company. Headquartered in New York City, the company specializes in providing financing solutions to middle-market companies across various industries. As a BDC, Prospect Capital is focused on supporting the growth and expansion of its portfolio companies through a range of financial instruments.

The investment strategy of Prospect Capital involves deploying capital in a diversified manner, including senior and subordinated debt, as well as equity investments. The company typically targets companies with strong management teams and growth potential, often in need of capital for acquisitions, recapitalizations, or other corporate purposes.

Prospect Capital’s investment portfolio spans a wide array of industries, including but not limited to energy, manufacturing, healthcare, technology, and consumer services. The goal is to build a diversified portfolio that mitigates risk while generating income and potential capital appreciation for shareholders.

Disclosure: Author didn’t own any of the above at the time the article was written.

Is It Possible to Invest in Flying Car Companies?

by Fred Fuld III

Many years ago, I bought stock in a Davis, California based flying car company called Moller International Inc. (MLER), which was the only publicly traded company that I knew of at that time that was in the flying car business.

I even went to one of their annual meetings back then, where they provided a free lunch, but sold copies of their “annual report“, pictures of their flying cars, and almond butter.

If you want to see one of them fly, you can check out the following video.

You will notice in the video that there is a crane with a tether attached to the M400X flying vehicle. It actually does fly; it’s not the tether that’s holding it up, and you look closely, you will see that the tether is slack, not tight.

Founded in 1983 by Dr. Paul Moller, a visionary engineer with a background in engines and Wankel technology, the company has been dedicating itself to this ambitious goal.

Early days and technological advancements:

Spin-off: Moller International emerged from Moller Corporation, continuing their work on VTOL aircraft.
Key technologies: The company focused on integrating crucial elements like electronic control systems, efficient ducted fan designs, thrust vectoring, and stable airframes.
Rotapower engine: A significant achievement was the Rotapower, a Wankel rotary engine that became a spin-off company, Freedom Motors.

Challenges and milestones:

Development time: Despite extensive testing and prototype advancements, the M400 Skycar, the flagship personal VTOL, faced a long development process fueled by fundraising and regulatory hurdles.
Publicity and controversy: Moller International attracted both attention and critiques, some skeptical of the Skycar’s feasibility and claims. In 2000, they settled a case with the SEC regarding promotional statements without admitting wrongdoing.
Progress and partnerships: Despite challenges, Moller International secured various contracts with government agencies and aerospace companies, demonstrating the potential of their technologies.

Unfortunately, the company hasn’t made any SEC filings since 2015, the stock symbol is no longer active on Yahoo!Finance or OTCMarkets, and several shareholders posted on Facebook that TD Ameritrade has removed the stock from their accounts with a notice that says: REMOVAL OF WORTHLESS SECURITIES (608689105).

Even the company website shows “Invalid symbol” for MLER.

So, you may be wondering, are there any other publicly traded flying car sites?

The term “flying car” can still be ambiguous, as many companies are developing different types of VTOL (vertical take-off and landing) vehicles with varying capabilities and target markets. However, several publicly traded companies are involved in this space, though most focus on air taxi services rather than personal flying cars.

Here are some notable examples:

Pure-play eVTOL companies:

Joby Aviation (JOBY): Developing an electric VTOL aircraft for air taxi services, with strong government and investor backing. $4.2 billion market cap.
Archer Aviation (ACHR): Aims to launch flying taxi services in Los Angeles and Miami, known for their innovative “Maker” design. $1.7 billion market cap.
EHang Holdings (EH): A Chinese leader in the eVTOL market, with passenger and cargo drones already in commercial use. $918 million market cap.
Eve Urban Air Mobility Solutions (EVEX): A subsidiary of Embraer (ERJ), focusing on the Brazilian air taxi market with its eVTOL model. $1.9 billion market cap.

Traditional automakers exploring eVTOL:

XPeng (XPEV): A Chinese electric car manufacturer, investing in flying car technology through its affiliate HT Aero. $12.7 billion market cap.
Geely Automobile Holdings (GELYY): Another major Chinese automaker, partnering with Terrafugia to develop eVTOL vehicles. $10.8 billion market cap.
Toyota Motor Corporation (TM): Collaborating with Joby Aviation on eVTOL development and infrastructure. $252 billion market cap.

Keep in mind:

Many of these companies are still in pre-revenue stages, focusing on development and certification.
Investing in them involves high risk and volatility, as the future of the eVTOL market remains uncertain.
Other private eVTOL companies, like Volocopter and Lilium, may also go public in the future.

It will be interesting to see if any of these stocks come high flyers.

Disclosure: Author owns MLER and TM. No recommendations are expressed or implied. Some of the mentioned stocks have low market caps, and should be considered speculative.

Fannie Mae List of Fake Companies Providing Fake Employment Verification: Why are these all in California?

Fannie Mae, the Federal National Mortgage Association, has a Mortgage Fraud Program that alerts the industry about frauds and potential frauds.

The organization has come up with a list of over 60 apparently fictitious companies that have provided fake employment verification using fake pay stubs.

Borrowers who are trying to get a mortgage to buy a house would list these companies as their employer and utilize bogus paperwork, such as W-2 Forms and paycheck stubs to prove that they have enough income to qualify for the loan

What I don’t understand is why are all these fake companies based in California?

As a matter of fact, Fannie Mae lists as one of the red flags for potential fraud as:
“California (geographic common denominator)”

How to Get a Free Jim Cramer Mad Money Sound Board

If you enjoy watching Jim Cramer and hearing all the sounds he makes on his Mad Money TV show, then you can have your own Jim Cramer’s Official Sound Board for free.

You can hear Buy-Buy-Buy, Sell-Sell-Sell, Bull, Bear, Hogs, Ka-Ching, Buzzer, and many more. There are a total of 20 sounds altogether.

You just need to go to the Mad Money Cramer’s Soundboard website.

Is the Corporate Gibberish Generator Better Than ChatGPT and Bard?

by Fred Fuld III

Let’s say you run a startup, and are trying to raise money. You want your offering circular to be impressive. Or maybe you are ready to go public and you need to beef up your prospectus.

Yeah, you can go to Bard or ChatGPT and create something usable.

But why do that when you can really impress potential investors with a bunch of corporate gibberish.

All you need to do is go to the Is the Corporate Gibberish Generator™, type in your company name, and click the Generate button.

A great set of gibberish will appear.

Could it be that this generator was originally created with an early form of artificial intelligence?

Crazy Woman Holding Your Money?

by Fred Fuld III

Supposed you asked someone where they put there money and they said Crazy Woman, would you think they were crazy?

Well maybe they wouldn’t be.

There is actually a bank holding company called Crazy Woman Creek Bancorp Incorporated (CRZY), which you can buy stock in, by the way. It was founded in 1936 and is based in Buffalo, Wyoming.

How’s that for stock market trivia?

The stock trades over-the-counter on the Pink Sheets.

It trades at a very reasonable 6.11 times trailing earnings and pays a dividend withy a forward yield of 1.48%.

The company posted the third-best performance in their 87-year history, with an annualized return on equity (ROE) of 10.41%.

The net interest margin at September 30, 2023 of 3.51% is above the state average of 3.31%.

As of September 30, 2023, the Tier 1 Leverage Ratio was 9.37%, which substantially exceeds the current definition for “well-capitalized” institutions. Also as of that date, the bank had no foreclosed or repossessed assets.

Would I be crazy for owning Crazy Woman shares?

If you want more investment trivia, check out the book.

Disclosure: Author didn’t own any of the above at the time the article was written.