Some information was released on Christmas Eve which REALLY surprised me, and so I wanted to highlight it for the readers.
The NYSE released short interest statistics on December 24 and here is what we learned about Intelsat (I).
Exhibit 1
You can see from Exhibit 1 that short interest was relatively stable at around 23% of the float for about 6 months. But then in early November the Intelsat crash occurred. If you are new to the stock and want to understand why Intelsat crashed and why I think it is now extremely cheap, check out my December 16th article here.
Given Intelsat fell 79.5% in 10 trading days last month I really expected the short interest to fall dramatically as well, now that the stock price has stabilized. But in fact, it did the opposite, skyrocketing more than 75% in the past month. Short interest now accounts for an astounding 40.6% of the entire company float. So, while very few had the foresight to short the stock when it traded in the $26s, it appears everyone wants to short it now that it is trading in the $6s. This seems like a classic case of every body following the herd, a behavior which rarely turns out to be profitable.
But now, possessing bullish fundamentals which I outlined in my previous article, a nice technical set up with an extended base, and a huge short interest position, I believe Intelsat is ripe for a powerful upside break. The combination of a short squeeze along with momentum chasing algorithmic funds (which have always played a big role in this stock) initiating new longs, has the potential to lead to an explosive move.
Exhibit 2
Source: Investing.com
In Exhibit 2 you can see the daily chart has formed a lovely narrow
