How the hell do people find stocks like FFIE & CRKN?

17th May by N0vice1Nvest0r

10 comments 669 reads

This week with AMC Entertainment Holdings (NYQ:AMC) /GameStop (NYQ:GME) I was shocked, but have since seen huge movements of Faraday Future Intelligent Electric (NAQ:FFIE) & Crown Electrokinetics. (NAQ:CRKN) !

Ive never heard of these stocks and they were never even remotely on my radar, but I am in awe at the people who find them.

Whilst im not stupid and understand they are pump and dumps, and you don't want to be the one left holding the bags. I still don't understand how people find these stocks and make 50%+ returns in a day or two.

Apparently it's all down to the float and volume. Anyone got any insight into this ultimate high risk strategy?

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N0vice1Nvest0r

Premium Member

Absolute novice investor that is trying to slowly grow wealth. Reading as much as I can, to learn from those who know, those who have done it and those willing to teach... more »

10 comments

Rusty2

17th May

I think these stocks are popular on social media and sites like Reddit. These type of stocks were popular during lockdown. Pumpers with lots of followers.

Snowbum

17th May

I’d not recommend getting involved in this type of thing, but seeing as you asked.

These aren’t really pump ‘n dumps, they are short squeezes.

The basic premise is to find a stock that is likely to experience a short squeeze. ie one that is heavily shorted, with a catalyst that could trigger the squeeze. If the free float is small and the % of stock sold short is higher, then a squeeze could be possible.

Avg daily trade volume is a big factor, if shorts can’t cover on the volume available then it can take several days to cover the position, leading to outsized swings that generally last for short periods of time before crashing back to earth.

You can find this data at sites such as:

https://shortsqueeze.com/

https://www.shorttracker.co.uk...

Bear in mind, you’re likely taking on some Wall St instis with very deep pockets, those who can make money off the squeeze are pretty skilled technical analysts with fast reactions…

The rest end up holding the bags…. if you haven’t watched the GameStop drama on Netflix it’s worth a look, I enjoyed it.

Take a look at price action in Hargreaves Lansdown (LON:HL.) recently, this is on the top 10 most shorted on LSE. Kingfisher (LON:KGF) ,also on the list, looks a possible contender for a squeeze in coming weeks imo.

Rusty2

17th May

Abrdn (LON:ABDN) is also one of the most shorted (3rd) stocks. Ocado (LON:OCDO) are 2nd. Diversified Energy (LON:DEC) 4th, ASOS (LON:ASC) are 5th.

l just sold Hargreaves Lansdown (LON:HL.)

Indie

21st May

Hi Snowbum, thanks for the Eat the Rich/GameStop (Netflix) recommendation. Learnt a lot, enjoyed it. I’ve also bookmarked the Shorttracker website. Reaping the benefits of the Stock community. Hat tip to you.

rmillaree

21st May

I still don't understand how people find these stocks and make 50%+ returns in a day or two.

gamestop and amc are easy - as soon as these stock pops virtually every idiot on social media will be promoting them - so you follow the idiots and slighly less idiotic more savvy people for reccomendations for reaearch. Its all a gamble though its highly likely these company may have close to zero intrinsic value and this may simply be a pump and dump effort with the later arrivers losing money and generating the profit for the early adopters who cash out at the right time - like any ponzi scheme.

Note one needs to take care here statistically speaking very few stocks pops 300% plus in quick fashion - so even if it does lok like a gamble most of the times the gains peter out at much morer minor spike levels. So if its a promising candidate it will probably still fail to mutibag 95% of the time even if it does spike up.

its fairly easy to see this in action with gamestop and its now rinse and repeat time - anyone whjo invested on the rise up from 5p to 80p could have made spectaculor gains as long as they sold out early enough - the reality is even though the price has popped a bit again its still down 75% ish from prior peak - what the peak this time is is anyones guess - i gues those who were burnt fisrt time around will be less likely to believe it will be back to 80p and stick this time.

Note this is all idle speculation on my part - somtimes you might have a decent buisness here - and thats when teh deep dive is needed to see if there is any substance.

Note i think gamestop were quite canny with prior spike - they used the ultra hugh shareprice to raise funds - so if shares are super expensive anmd a company does raise money when that is the case that could transform a companies prospects - so gamestop is probbaly les of a basket case than it was previously - although if they are raising money again now its posible that that money has now been spent and they may be back to similar to what they were previously - a bit of luck doesnt change a crapola buisnes model into a good un

2021 news

As part of a previously announced equity offering, Grapevine, Texas-based GameStop disclosed Tuesday it ultimately sold 5 million shares for an average price of $225.2—a staggering 1,206% higher than the stock’s closing price of $17.25 on the year’s first trading day.

Though it didn't make any further disclosures Tuesday, GameStop said in a regulatory filing earlier this month it plans to use proceeds to invest in “growth initiatives” and help bolster its cash on hand.

In April, the company raised another $551 million by selling 3.5 million shares at an average price of about $157.

Alphaflight

21st May

If company XYZ has 100 shares issued in total then Wall Street is selling more than 100 shares of XYZ i.e. they are selling shares that don't exist (e.g. in the case of Gamestop). People have worked this out and thus playing wallstreet at their own game via the squeezes. The silver market is similar to this, for every real troy ounce of silver there are hundreds of paper contracts suppressing the paper price...what we are not seeing is a disconnect taking place with gold and silver as the higher Chinese physical prices mean arbitrage between London and China materialize and thus the physical metal flows from west to east.

Snowbum

21st May

Glad you enjoyed it Indie. I can’t take credit for the short tracker site as it was mentioned to me here previously too, happy to pass on the info.

In ref to the general theme of the OP….

Fund managers seem to be moving higher, I’ve taken a position in Abrdn (LON:ABDN) with a stop at the low around 132p, as looks like some accumulation / short covering at the 150p level imo, also a nibble at Kingfisher (LON:KGF) as the chart looked interesting imo - let’s see if either get squeezed!

StrawberryDreams

21st May

A lot of it is instituionalised now i reckon post GME and AMC there has been a lot of wall street/reddit/X data scraping and analysis by hedgefunds etc.. to try get the fomo pumping and a lot of the young, retail investors have gone back to work.Apparently even Roaring Kitty sold his account a while back......

Although very high short interest and small float always helps, which is all i've heard people looking for, although GME involved option buying too, and market makers had to buy more stock to hedge their contracts, and huge implied volatility naturally.Maybe if you can track unusual implied volatility increases or something if the stock has options., it could help..

Not sure if any hedgefunds would dare naked short more than 100% of the float anymore though as other hedgefunds would destroy them nowadays.A lot are small, obscure chinese new US floats surprisingly!VinFast Auto (NSQ:VFS) in the news recently, a real auto company, multibagged when first floated as the majority of the stock is owned by a billionaire founder.Often a fine wire naturally to tread between massive dilution and a small window for a multibag naturally.Helps to have the right analytics and some kinda algorithmic trading bot i'd think to vastly increase your chances.

The Phoenix

21st May

Interesting Alpha I've no doubt your correct but how does it work in practice ? presumably xyz hedge funds sells say 10,000 shares short it doesn't have and then has x amount of days to close out either at a profit or they have to buy the stock in the market to close ?

I'm also guessing they can probably keep rolling the short for a long time also if they want so long as volatility doesn't work against them forcing them to close.

Regards Andy

N0vice1Nvest0r

21st May

Thanks for this guys, think I get how they find them but how do they know the volume is coming?? This is what I don't understand. I'm ok at TA and look at certain stocks and wait for a buy, however these stocks seem to absolutely pump without warning, and these guys know its gonna happen.

I'm not trying to find a way to copy, I'm trying to understand how they do it without it being some sort of insider trading.

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How the hell do people find stocks like FFIE & CRKN?

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N0vice1Nvest0r

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