Today, shares of Camber Energy (NYSEMKT:CEI) opened higher by 15% as the shortened Thanksgiving trading week kicks off. The energy company announced that the NYSE American exchange had granted its request to file its delayed earnings report on Dec. 17.
So what do you need to know?
Camber Energy originally intended to file its delayed earnings on Nov. 19. However, due to certain circumstances that weren’t made public, Camber requested another extension period. If Camber doesn’t file its earnings by Dec. 17, the company will have to file another extension grant. Its maximum deadline is currently May 22, 2022. If no report is filed by May 22, the NYSE American could permanently delist CEI stock.
Investors in CEI stock are celebrating today from the positive extension news. However, with the threat of delisting still looming in the distance, the coast isn’t clear yet. The stock experienced turbulence in October when a multibillion-dollar hedge fund published a short report. Investors in CEI stock should evaluate the short report to understand the bearish point of view. That way, interested investors can better do their own research and make a decision on CEI.
What to Know About the Short Report on CEI Stock
Kerrisdale Capital, a hedge fund with $1.8 billion in assets under management (AUM), publicly released a short report on Camber Energy on Oct. 5. The fund’s founder and CIO, Sahm Adrangi, is no stranger to releasing controversial short reports. Adrangi first gained notoriety in 2010 after successfully shorting several Chinese companies with shady auditing practices and accounting irregularities. By the end of 2012, Kerrisdale was named one of the best-performing hedge funds based on three-year returns by the Barclays Hedge Fund Index.
On the day of the report, CEI stock opened at $3.01 and closed at $1.53, down 49%. It certainly isn’t a reassuring sign that Camber Energy has yet again failed to file their earnings report and requested another extension.
Let’s take a look at a few highlights of the short report:
- Kerrisdale Capital states that Camber has failed to file quarterly earnings reports since September 2020.
- Camber’s only material asset is a 73% stake in Viking Energy (OTCMKTS:VKIN).
- According to Kerrisdale, Camber’s partnership with ESG Clean Energy is questionable as the company is owned by the Scuderi Group.
- The Scuderi Group has faced U.S. Securities and Exchange Commission penalties in the past for raising $80 million in unregistered securities offerings.
- Kerrisdale alleges that Camber’s fully diluted share count is triple what the company reports.
- According to Kerrisdale, “We estimate that, of the 104.2 million common shares outstanding on July 9th, 99.7% were created via the conversion of Series C preferred in the past few years — and there’s more where that came from.”
- Camber’s share count has increased 50-million-fold from 2016 to July 2021.
- Kerrisdale also said, “It’s ridiculous to have to say this, but Camber isn’t worth $900 million. If it looks like a penny stock, and it acts like a penny stock, it is a penny stock.”
The Bottom Line on Camber Energy
Camber acknowledged the short report through a written response from ESG Clean Energy. ESG stated that:
“Kerrisdale Capital is a short seller that held and may still hold positions in the stock of CEI. This report includes misinformation on Scuderi Group technology and a licensing arrangement between ESG Clean Energy and Camber/Viking. We welcome this opportunity to correct this information.”
CEI stock itself however remains a risky investment. As stated in the report, the company trades as a penny stock with a low market capitalization. While the news of an extension has sent prices up, the notion of a delayed earnings report is still bad news. Potential investors should wait until Dec. 17 to see if Camber actually reports earnings or extends their deadline.
On the date of publication, Eddie Pan 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.