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Voxeljet: A Contrarian View Of A Contrarian Position

Summary

Shorts in the AM sector are way up recently

Q2 performance is likely the cause

VJET on a relative basis performed the best

VJET has the lowest short ratio, hence the best risk/ reward profile

According to 24/7 Wall St., short interest during the two-week period ending August 15 rose on all four 3D printing stocks publicly followed by the latter. As of that date, all four stocks had seen share prices down sharply from 2017 highs.

Here are the short numbers reported:

DDD: 25.3% of its float w/ days to cover 7 from 12

SSYS: 10.3% of its float w/ days to cover 6 from 9

XONE: 22.1% of its float w/ days to cover 8 from 25

VJET: 2.7% of its float w/ days to cover 6 from 10

The contrarians who are shorting obviously are totally negative on the AM sector and for good reason after the dismal Q2 results. It seems there is a pattern to be gleamed from of all of this. The companies with the worse results in their performance and the greatest amount of disappointment in their respective projections for 2017 and beyond have the highest percent of their shares being shorted.

I know many believe the greater the aggregate short position, the better the upward launch should good news develop. And normally that's true. But does it square when that notion is translated into the concept of risk/ reward? Arguably, DDD's performance was the worse and the projections even under a best case scenario were not so good. So yes any positive DDD news would drive the stock considerably higher, but what is the probability at this point of any news that is good compared to the potential for the lower end of projections. I would say very risky and the downside chances are higher than most investors are willing to accept.

Applying that logic to VJET, the picture appears much brighter from a risk/ reward perspective.

Those shorting a company with a very good story going forward are a high risk territory and hence the lower short position of only 2.7 percent makes perfect sense.

For a summary of the VJET positives see my SA blog Voxeljet Headline So Misleading - 11822371