Today, one of the stocks in focus for investors is Camber Energy (NYSE:CEI). Indeed, CEI stock has been a big mover over the past month. Since trading at around 35 cents per share in late August, shares of Camber Energy surged to as high as $4.85 last week. This rapid rise came on the heels of surging energy prices and a bullish outlook for small-cap energy plays with tremendous leverage to this catalyst.
However, today, shares of CEI stock have given up the vast majority of these gains, now trading sub-$1.30 per share. Today’s decline of approximately 60% in Camber Energy has been responsible for most of this fall.
Indeed, any sort of daily decline such as this one is worth diving into. It appears investors are pricing in the impact of a high-profile short report. Kerrisdale Capital announced a short position and a rather impressive thesis on Camber Energy just this morning.
Let’s dive into what Kerrisdale sees as problematic with CEI stock.
CEI Stock Down Big on Short Report
Any short report comes with some level of skepticism among investors. Those bullish on a given company may choose to ignore such a thesis. However, this 25-page short report appears to be quite detailed and highlights a number of key issues with this fast-moving stock.
Here are nine of the top highlights from this report:
- Kerrisdale Capital suggests CEI stock is in danger of being delisted next month.
- One of the key drivers of this view is the fact that the company’s accounting firm was fired in September.
- The short report notes that Camber Energy’s only real asset is a 73% stake in Viking Energy, a company with a going-concern warning.
- This position is highly leveraged and at risk of defaulting on its loans.
- Additionally, the short seller points out that dilution has been spiraling out of control.
- Kerrisdale estimates the fully diluted share count of CEI stock is roughly triple what’s being reported.
- Additionally, the short-seller points out that CEI stock has already seen its share count increase 50-fold over the past five years.
- This amounts to a valuation Kerrisdale says is simply inconsistent with the company’s true value.
- Accordingly, Kerrisdale posits CEI stock will soon be a penny stock once again.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.