Cestrian Stocks Bulletin

By Cestrian Capital Research, Inc

It's Always The Quiet Ones (Cestrian Stocks Bulletin #70)


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Cestrian Stocks Bulletin
It's Always The Quiet Ones (Cestrian Stocks Bulletin #70)
By Cestrian Capital Research, Inc • Issue #70 • View online
More reasons to not short a 12-year long raging bull market.

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note’s date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
We Shouted This One From The Rooftops
In all our pay services, from our simple idea-of-the-week-service to our real-time-work-side-by-side-with-us service, we’ve flagged Spire Global ($SPIR) as a buy. We said so from the day that, as a private company, it stated it was due to be acquired by the SPAC shell, NavSight Holdings (former ticker, $NSH). Even when the SEC decreed that SPACs were doubleplusungood, we said, Spire is a buy.
Our logic was simple. It was a SPAC, Jim, but not as we know it. No science project this, but a real business whose economics are no worse or better than market darling Cloudflare ($NET) - it just happens to be in space. We like Iridium ($IRDM) because it’s a telco, in space; we like Spire because it’s an analytics business, in space.
The market’s initial response to our clarion call can only be described as, meh. The stock barely moved out of the $9-10 zone for months. And, on de-SPAC day when SPAC shareholders elect to either convert their shares in the holdco into shares in the target company, or redeem to get their $10 back … some 90%ish of NSH shareholders redeemed! This we found remarkable. But still we said, Buy.
Well, that call has started to bear fruit, abundantly it might be said. As is typical in any kind of stock analysis, the reason the idea is playing out is not at all related to the reasons we thought would cause the stock would move up. But no matter. Moving up is what it is doing. From the notional $10/share value where you could have bought SPIR on many occasions in recent weeks, the stock closed today at $15.27, up around 50% in barely a few weeks.
Actually you could have bought the name at sub $9 just four weeks ago. Here’s a note of ours from 25 August.
Source: https://seekingalpha.com/article/4451799-spire-global-reiterate-buy
Source: https://seekingalpha.com/article/4451799-spire-global-reiterate-buy
The reasons the stock has moved up so far and so fast are technical in nature and have to do with (1) folks decided to short it at around $10.50, which seems unreasonably Eyoreish in our view; (2) the swathe of redemptions means a low float, so small purchases and sales of stock are amplified in the price action; and, (3) you combine (1) and (2) and you have a whole lot of people that have no business shorting growth stocks, having to cover their shorts. Which impacts on point (2) again.
(If you care to dive into the deepest technical analysis detail, Reddit of all places has the finest work we’ve seen on what’s happening at SPIR. [The post itself is SFW but, being Reddit, don’t be surprised to find noises off of the NSFW kind]. In the original version of this issue of Cestrian Stocks Bulletin, we linked to the post - the post has now been removed by the author but a bright spark among our subscribers saved the post already. You can find it here. )
We’re holding Spire in staff personal accounts for the long term. If things get very crazy-up in the coming days and weeks we might trim our SPIR holdings in the hope of buying back in cheaper later, but, we might not. That’s a tough game and one that’s easy to lose, creating your own FOMO field along the way if you aren’t very careful. For now, we remain long SPIR - and SPIR.W for that matter.
If you want to tag along as we try to find the next big movers in tech and space? Here are the links you need.
And don’t forget to join our infinite-game, multi-user-dungeon style grownup stocks board, Cestrian Stock Symposium. It doesn’t have the actionable calls but it does have a great atmosphere and plenty of folks contributing ideas, charts and so forth.
Cestrian Capital Services - 21 Sep 2021.
DISCLOSURE - Cestrian Capital Research, Inc staff personal account long positions include NET, SPIR, SPIR.W and IRDM.
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