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Quick Note: New Short Sale

By Travis Johnson, Stock Gumshoe, August 29, 2016

Despite the fact that I almost never bet against stocks, either through shorting or put option buying, this is not likely to be shocking news for those who follow my Friday File commentaries. I wrote about having this personal inclination about this specific stock in my Friday File note on August 19…

… and since then, the ads have gotten even more dramatic and compelling, and the teaser push for this stock has gotten crazier, and the price of the shares hit levels that, to my mind, were unresistable.

Today’s note is to alert the Irregulars that yes, I did indeed succumb to temptation this morning and sell short some shares in Energous (WATT), following yet another crazy morning opening that is almost certainly far more reflective of the Agora Financial push for this stock and their connection to Apple’s “September 7 announcement” than it is of their actual near-term prospects.

For those interested in the mechanics of trading, I also bought a few way-out-of-the-money options for September 16 so I can define my maximum risk in case something drastic happens to drive the shares dramatically higher (like a takeover offer, or like me being dead wrong about next week’s announcement), and I will almost certainly be covering this short position within the next ten days regardless of where it stands.

This is an expensive short to hold, it wasn’t even available for borrow from some of my brokers… and I don’t have a fundamental beef with the company’s prospects over the next five years. I just think it will fall sharply from this high next week (or from higher prices if they drive it there) when Apple reveals, as I expect, that there is no “WattUp” system in any of their new products. And there is no reason I can see for WATT to be moving higher over these past two weeks, other than the steady drumbeat of promotion from Ray Blanco and the other folks at Agora who are trying to imply that Apple’s next iPhone announcement will send WATT shares soaring.

I don’t usually make very short-term bets like this, but sometimes I can’t resist. I’m not suggesting that you do the same — shorting stocks is not rocket science, but it is expensive and risky and it rarely works well over longer time periods. The other alternative I considered ...

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