Inexpensive stocks can be volatile. It’s a reality that investors should be aware of, including shareholders of diversified energy and power solutions company Camber Energy (NYSEAMERICAN:CEI). CEI stock is definitely a fast mover in both directions.
Before you get whipsawed by the markets or make a hasty decision, it’s essential to slow down and learn the facts. Consider the motivations any harsh critics of Camber Energy might have.
At the same time, don’t just dismiss the criticism outright. There might be issues to be aware of, and no one’s saying that holding CEI stock is always going to be a smooth ride.
Finally, never forget the old maxim that there are two sides to every story. Your job, as an informed investor, is to be like a judge: weigh the evidence and then decide which facts are true and relevant.
CEI Stock at a Glance
The first thing to observe about CEI stock is that its low price makes it attractive to Reddit traders. We might informally call it a penny stock because trades below $5.
You don’t have to be deterred by this. There are plenty of perfectly good companies with low-priced stocks. Besides, getting a short squeeze from Reddit users isn’t something that reflects poorly on the company itself.
Believe it or not, back in mid-August, the CEI stock price was just 34 cents. But then, the stock started to ramp up into September, topping out at $4.85 on Sept. 29.
Was the Reddit short-squeeze crowd involved in this amazing rally? It’s certainly a possibility, though it would be difficult to prove.
October has been more challenging to the shareholders, as CEI stock dropped to $1.46 by Oct. 12. This means you might have a chance to pick up some shares at less than half of the peak price.
Here Come the Critics
With any start-up company, there will always be naysayers. This is true even for a highly promising business.
Take Camber Energy as an example. The company recently announced an acquisition of 60.5% interest in Simson-Maxwell through its majority-owned subsidiary.
Simson-Maxwell manufactures and supplies industrial engines, power generation products and custom energy solutions. It services more than 4,000 existing maintenance contracts.
Taking a majority interest in Simson-Maxwell should make Camber Energy attractive to Environmental, Social and Governance (ESG) investors. In fact, a majority-owned subsidiary of Camber Energy recently entered into an Exclusive Intellectual Property License Agreement with ESG Clean Energy.
This deal involves the latter company’s “patent rights and know-how related to stationary electric power generation, including methods to utilize heat and capture carbon dioxide” via the ESG Clean Energy System.
All of this should sound appealing, but a scathing report suggests Kerrisdale Capital isn’t too impressed with Camber Energy.
Camber Energy Is Staying Out of the Fray
In the report, Kerrisdale Capital asserts that the “recent clean-energy license is nearly worthless.” Presumably, Kerrisdale is referring to the deal with ESG Clean Energy.
Apparently, Kerrisdale is also bothered by the fact that “Camber’s stock price has increased by 6x over the past month; last week, astonishingly, an average of $1.9 billion worth of Camber shares changed hands every day.”
It’s not a crime for a company’s stock to become popular with traders. Yet, Kerrisdale asks, “Is there any logic to this bizarre frenzy?” The firm calls the investors “pumpers” who “have seized upon the notion that the company is now a play on carbon capture and clean energy.”
Well, that “notion” isn’t false if Camber Energy is investing in ESG businesses.
In any case, Kerrisdale Capital acknowledges in the report that it has a short position in Camber Energy. Moreover, the company is taking the high road and effectively staying out of the fray:
“We are not involved in, nor do we comment on, the day-to-day trading of the company’s common stock. I can say, however, that our business relationships are legitimate and that we are firmly committed to improving the organization’s capitalization and executing on our growth strategy.”
The Takeaway on CEI Stock
It’s probably a good thing that Camber Energy is defending itself without escalating the debate. That’s a mature response, and is commendable.
So, it’s okay to take Kerrisdale Capital’s report with a grain of salt.
CEI stock is now down from its peak price. So, if you still believe in Camber Energy’s commitment to ESG business ventures, then feel free to stay in the trade.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (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.
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