Shares of MOBI have been a veritable roller coaster in 2014. At this time last year shares were trading down around $3.50. By March they had soared to almost $13 for roughly 300% gains. By May they had given a large part of those gains back, about half, falling back to $6 in May. Then as summer ended they took off again, going over $10 by September.
As I said, quite a roller coaster. From around $3 up near $13, down to $6 and then up near $11. And now? Now they've crashed all the way back down to the low $4s.
MOBI came onto my radar in the summer when it was being heavily touted on Stocktwits where I post with the username growacet. An anonymous outfit called stockreversals was pounding the table, they included it in their emails blast and did a write up on here saying it was cheap at double the price.
I'm not a big fan of chop shops that send out email blasts, especially on stocks that have already made huge gains, something the stockreversals crew does repeatedly. Realizing however that you can make $$$ no matter whether a stock goes up (by going long) or down (by going short) I decided to try and profit from what I saw as a pumped up stock falling.
And I did, by buying puts in with a strike price of $7.50 that expired in January I almost tripled my money. My timing was by no means perfect, had I waited and bought my puts in September when the PPS was over $10 they would have cost less than they did when I bought them, which was when MOBI was trading around $9.
I shared my opinions on stocktwits, and on yahoo (krill66) as well as on stockhouse (ledrog). Yes, I am something of a message board or stock forum junkie. Mea Culpa. It was a classic contrarian play, the pumpers said I was an idiot, a moron....you name it. Look at the fundamentals I was told repeatedly. On stockhouse I gave a detailed explanation for why I believed that MOBI was going to move down in the months to come.
It turns out I was right. So why have I changed my mind all of a sudden, sold my puts, and gone long?
Two words, short interest.
MOBI strikes me as an incredibly manipulated stock. The funny thing is most retail investors (which is what I am) only think about manipulation when a stock goes down, never when it climbs. Well, it works both ways.
Smart money investors make money by buying low and selling high, dumb money retail investors do the opposite. Retail investors start watching a stock because of some promotion and maybe some stock forum hype. Then they see some news come out, and if the stock starts climbing they jump in, thinking they've caught a good one.
Of course while dumb money retail is buying into the rising price and reading the great sounding news and bullish promotion, others are selling. And when its all over dumb money retail is left holding the bag.
That's my view of what's happened so far.
There was just one thing missing however. With a pumped up stock, when it hits the apex of its trading, I expect to see a big jump in short interest. That hasn't happened with MOBI. Not in March when it went near $13, and not in September when it went back over $10.
Short sales did get up around 750K in April after the March spike, and then to almost 600K in October after the more recent run. But since then short interest has collapsed. In fact the most recent update for November 28th had short interest dropping by more than half, all the way down from 560K to just 244K. That's the lowest short interest has been in MOBI since February 28th when it was 160K.
According to WSJ.COM's list of biggest drops in short interest for the most recent period, MOBI is #1.
On top of everything else the news tap has shut off. Aside from reporting their financial results and announcing their AGM they haven't put out a PR since September from what I see.
Just as MOBI pulled back after the run near $13 before running again in the fall, I think this pull back (based on the absence of any substantial short interest) is just another precursor to another big run.
Only this time I see there being potential for the stock to trade even higher than it did this past March.
That's my opinion, which of course should not be construed as investment advice. Investing in stocks, whether long or short, by buying puts or call..Investing comes with significant risks. I urge any and all investors to do their own due diligence and to consult with a professional investment advisor.
Disclosure: The author is long MOBI.