August 30, Sunday.
The heat in Shan City is at its peak during this season. The high-rise buildings in Jiangbeizui are whitened by the afternoon sun, and the river surface in Two Rivers Confluence reflects the dazzling light.
Even though it's the weekend, the lights are still on in Henglong Headquarters's top floor office.
Zhao Chen came over after lunch as usual to process several quarterly review filing documents that needed to be signed. Pu'er in Zisha Pot has just been renewed for the second time.
As soon as he opened the first document, a video call request from Lin Shicheng popped up in the lower right corner of the computer screen.
New York It's two o'clock in the morning over there, and Floor-to-Ceiling Window behind him is Midtown Manhattan sparsely lit.
There was a cup of cold black coffee on the corner of the table, his tie was loosened, and his shirt cuffs were rolled up to his forearms.
Three printed documents were spread out on the table, and the margins of each document were densely marked with red and blue pencils.
"Zhao Zong, Short Selling The screening report is completed."
Lin Shicheng did not exchange greetings. He turned the three documents to the cover one by one and showed them to the camera.
"The first, US Stocks Short Selling list of targets with a proportion exceeding ten percent.
The second part is a summary of the price trends of rare metals and precious metal futures.
The third part is the one I added myself - the cross-screening result with the highest proportion of Short Selling and the possibility of marginal improvement in Fundamentals. This part is the focus."
Zhao Chen picked up Zisha Pot, poured himself a cup of tea, and motioned for him to continue.
"Let's talk about the first list first."
Lin Shicheng turned the first document to the second page, and a form appeared on the screen.
Each line is marked with the stock code, Short Selling ratio, Circulating Supply loan ratio and the stock price range in the last three months.
"As of late August, among the targets with the highest ratio of US Stocks Short Selling, four are worthy of special attention.
The first one, GameStop, code GME.
The proportion of Short Selling is one hundred and five percent. Yes, it exceeds one hundred percent of Circulating Supply.
The proportion of outstanding shares sold short has remained at an extremely high level since the second half of last year, with stock prices hovering between four US Dollar and six US Dollar at the end of July and early August.
The company Fundamentals is in very bad shape. Offline game retail has been squeezed by both digital distribution and the epidemic. It has suffered losses for many years and stores have continued to close.
But there is one variable - Ryan Cohen, the founder of pet e-commerce Chewy, started buying a large amount of GameStop shares in August.
Amazon is promoting the company's transformation into the gaming field.
The Short Selling ratio is extremely high, and Fundamentals has marginal improvement expectations. This is a typical Bulls and Bears confrontation structure."
Zhao Chen placed the teacup on the table and paused with his fingers on the edge of the cup.
"One hundred and five percent. The amount of Circulating Supply loaned out to Short Selling exceeds the actual number of shares in circulation."
"Yes. This means that if the stock price rises, the Buying Pressure covering by Short Sellers will be very violent.
Short Squeeze has had a similar structure in history, but the stock price of GameStop is now only a few US Dollar, and its market value is extremely small.
Era Vanguard If you use the Options market to establish exposure, the actual amount of funds invested does not need to be too large.
The key is timing - Ryan Cohen's position is still in the early stages and the market hasn't noticed this variable yet."
"The second one."
"AMC Theatres, code AMC.Short Selling ratio is about 53%.
The impact of the influenza on offline theaters has been devastating. AMC's cash flow has almost been broken, and the market generally believes that it cannot survive this round.
But its Short Sellers structure is equally extreme - the proportion of Circulating Supply being sold short is more than five times that of the normal US Stocks.
The logic of this ticket is similar to that of GameStop. Fundamentals is extremely pessimistic, but the ratio of Short Selling is too high. Once any marginal improvement signal appears--
For example, the progress of vaccines, the reopening of theaters, or the implementation of a new round of financing--Short Sellers The pressure to make up for it will be very concentrated."
"The third and fourth ones are just marijuana stocks.
Tilray and Sundial Growers, Short Selling ratio is over 40%.
The logic is that Biden's campaign platform supports the federal legalization of marijuana. If Democratic Party wins the election, the policy environment of this track will fundamentally change.
However, the Fundamentals of cannabis stocks is too weak, and cash flows are generally negative. If policy expectations are met, the stock price will quickly return to the original point.
I put these two on the reserve list, with a lower priority than GameStop and AMC."
Zhao Chen went through the names GameStop and AMC in his mind.
The Short Selling proportional structure of these two tickets is exactly the same as what he experienced on Tesla in 2019 - extreme Short Selling, Fundamentals pessimistic, and the market is unanimously bearish.
The difference is that the Tesla had the Magic City factory and Model 3 Capacity Ramp-Up as the Fundamentals support, while the GameStop and AMC's Fundamentals really sucked.
Short Selling ers are not wrong, their judgment is correct.
But the extreme Short Selling ratio itself is a structural risk--
When all chips that can be shorted have been shorted, any large amount of Buying Pressure may trigger a stampede.
"Where are the rare metals?"
Lin Shicheng Turn the second document to the home page.
On the screen is a multi-category price trend summary table, covering the four categories of Silver, lithium, cobalt, and rare earths.
"Silver Futures, this is the most noteworthy one.
COMEX Silver on Friday hit 29.9 US Dollar per Ounce, a seven-year high.
Since the lows in March, the gains have exceeded 80%.
The domestic main contract of Shanghai Banking Corporation Limited once reached its daily limit in early August, hitting a maximum of 6,152 yuan per kilogram.
There are two driving logics.
First, the global Central Bank unprecedented liquidity was released, and the monetary attributes of hard assets were repriced. Gold rose first, followed by Silver.
Second, industrial demand has recovered after the epidemic, and the consumption of Silver in the photovoltaic and electronics industries is accelerating.
The gold-silver ratio is now around 70, which is much higher than the historical average. If the mean returns, Silver still has room to make up for the increase."
Zhao Chen paused at the line Silver on the form.
The price of twenty-nine US Dollar is very close to a certain point in his memory a long time ago, but at this moment he does not need to rely on memory--
Lin Shicheng gave him logic deduced from public data, not prediction.
"Lithium and Cobalt."
"The price of lithium carbonate, battery grade, fell to 38,000 yuan per ton in September, the lowest point since 2015.
But it began to bottom out in November and returned to 46,000 yuan per ton in mid-December.
Industrial grade lithium carbonate rose from 41,700 to 44,800 during the same period.
The price of lithium concentrate once fell below the cash cost line of the Australia mine in September, which means that high-cost production capacity is being cleared.
The production and sales of downstream New Energy cars picked up significantly in the fourth quarter, and the demand side is improving.
The situation for cobalt is similar - electrolytic cobalt rose from about 240,000 yuan per ton at the beginning of the year to around 300,000 yuan per ton in August.
The port blockade of South Africa has led to tight supply of cobalt raw materials, and the supply uncertainty of Democratic Republic of the Congo is intensifying."
"Rare earths."
"Praaseodymium and neodymium oxide has increased from 280,000 yuan per ton at the beginning of the year.
After a brief decline in the first quarter, it began to rise, reaching the highest level of 440,000 yuan per ton at the end of November, with an annual increase of approximately 43%.
Neodymium oxide increased even more, from 288,000 yuan at the beginning of the year to more than 500,000 yuan at the end of the year, an annual increase of more than 77%.
Northern Rare Earth has continuously raised its listing price, the market Spot inventory is tight, and the demand for downstream magnetic materials is recovering.
Driving factors include the consumption of NdFeB by New Energy automotive motors, the growth of wind power installed capacity, and the purchase and storage expectations."
Zhao Chen flipped through the three documents from beginning to end.
The room was quiet for a long time, with only the low air flow of the air conditioner and the faint sound of the river whistle outside the window.
He put down the tea cup and asked a question.
"What is your own judgment in the cross-screening results?"
Lin Shicheng Turn the third document to the last page.
There was only one line of handwritten words on that page, which was the core conclusion he extracted from a pile of data last night.
"GameStop and AMC, Short Selling have extreme structures, and Fundamentals has the possibility of marginal improvement.
However, the event-driven characteristics of these two tickets are too strong and they are not suitable as the core holdings of Era Vanguard.
My suggestion is to use special opportunity accounts to establish small-scale exposures, control risks through the Options market, and not be included in the quarterly review scope of Henglong Research Institute.
There is higher certainty for Silver and lithium - Silver benefits from the recovery of global liquidity and industrial demand, and lithium benefits from the recovery of New Energy automobile production and sales and the clearing of high-cost production capacity.
The holding period of these two varieties can be longer and the logic is tougher."