Once again, a big jump in the Short Interest. The reported short increased by 200,000 shares to a record 1,187,000 which is now over 14% of the float and “Days to cover” based on the volume of that last two week period jumped to just under 11 days. In the past two reporting periods (4 weeks) at an average price of around 3.12, the short interest has increased by 341,443 shares. Add the prior two week period and the total six week short position has increased by 458,326 shares at an average price of 3.26. With a very tightly held float of only 8 million shares, this is truly incredible and should be setting the stage for a MAJOR move up. And I mean soon.
What is really amazing is that in this last reporting period, KNDI was one of the very few NASDAQ China stock whose SI increased at all and its increase of over 20% is the biggest percentage jump, period over period, this year. And this increase over the past three reporting periods has been happening while each reporting period saw less and less average daily volume. In January, when the short interest started to really ramp up as the stock hit is high of the year of $6.75, the average daily volume was over 550,000 shares. The last reporting period saw average daily volume decline to just 110,000 shares, and with yesterday being the last trading day in the next short reporting period, the average daily volume has again dropped to 90,000 shares. (51,000 average over the past three days alone).
During all this time, the Company, which has 20.3 million shares outstanding of which 12.2 million shares is owned by the Chairman, founder and CEO, reported a Record first quarter with top line up over 106%, and bottom line of $.04 ex-non cash charge for stock based compensation. It also announced the approval by the China Government of three new pure electric passenger cars, received a Government subsidize contract to deliver 3,000 of their newest electric vehicles for consumer sales over the following few months, made initial sales to the China Postal Service for electric postal delivery cars, and announced the formation and leadership of a Joint Venture with three, multi-billion dollar China energy companies to advance KNDI’s patented technology in Electric Vehicle Battery Quick change. And most recently, announced construction has begun on the Joint Venture’s first Central battery recharge farm to feed the Changing Stations, fully paid for by the China Government.
Admittedly, KNDI is little known on Wall Street with virtually no Institutional ownership and no analysts following. And to some for good reason. As of this writing, they have no Company Executive who speaks English. Therefore, they have not done any stock promotional tours, no Conference Calls, and they don’t give Guidance. All pretty much a requirement to get Wall Street’s attention, and certainly to get any legitimate analyst’s attention.
I have in the past spoken with the CEO Mr. Hu on two occasions through an interpreter, Once in 2008 when they listed on NASDAQ, and most recently two weeks ago. In my most recent discussion, I did not ask any questions out of respect for inside information rules, but I did make three comments. One, KNDI has an urgent need for an English speaking executive. Mr. Hu’s response was effectively that he “understood the need, and that was now a top priority and was being worked on as we spoke”. Two, the need for US Company Institutional and Analyst road shows. His response was as soon as they have their English speaking executive and get him or her up to date, they would immediately begin road shows”. And Three, the Company’s English website is woefully out of date. He appreciated the heads up and would try to get that taken care of soon.
After these comments and his response, I thanked him for the courtesy of the call, and complemented him on the amazing recent successes of the Company. He responded by thanking me for my comments and concerns and assured me that he “could not be more happy with what has been going on with the Company, both in China and the US, and expected with a bit more shareholder patience, shareholders would be significantly rewarded.”
Bottom line, IMO.
If one reads my past recent SA blogs on KNDI, they will notice I have given a fairly thorough history and update on the Company. In my three years following the Company, the surprises have all been upside considering past market environments. I expect that trend will continue. IMO, there are two logical reasons why the stock has been performing so poorly, neither of which have to do with fundamentals or growth potential. One, the lack of exposure due to no English speaking high level company representative, and two, which likely had a lot to do with one, the massive short position.
It appears that “One” is soon to be corrected, which in turn should be disastrous for the short sellers.
I have been involved in the Market both professionally and more recently as a passive investor for more than 36 years. I have never researched a company more thoroughly as I have Kandi these past three years. To have an always profitable Company that is in the forefront in one of today’s hottest sectors, China Electric Vehicles, with a massive short position, volume drying up and trading at less then replacement value of their fully paid for Manufacturing Facility, and no current Institutional ownership or analyst following, is IMO, a once in a lifetime market opportunity. With the rest of the market in China Stocks now heating up, it can only be a matter of days or weeks, not months before KNDI shareholders should see the beginning of a massive move up in their ridiculously undervalued shares.
Disclosure: Long KNDI