Short sellers have reached a new level of idiocy…
Imagine having an IQ so low that you think shorting a stock with buyout news is a good idea.
I swear, brokers should require an IQ test before traders can short stocks … But then we wouldn’t be able to profit from their dumb decisions — so I take that back.
Anyway…
I got a few questions about AgroFresh Solutions, Inc. (NASDAQ: AGFS) yesterday in Pre-Market Prep and my morning SteadyTrade Team webinar. So I’m going to answer them here — just so everyone’s clear about what this stock is…
I don’t usually trade stocks with buyout news. But this one is a little different.
So allow me to explain why and how you can trade this unusual outlier…
Why AGFS Might Be The Dumbest Short Squeeze EVER
Yesterday, AGFS announced that one of its largest shareholders made an offer to buy the company’s remaining shares for $3 each.
When I saw the offer news, I was curious why AGFS wasn’t trading at $3 as most buyout deals would be … More on why that is later…
So as part of my research, I end up on Twitter… (I know that’s always a mistake. But that’s another topic for another day.)
And I see a bunch of idiots sharing how they’re shorting it because they think this deal will fall apart.
There are actually people bragging about locating shares and getting borrows.
This baffles my mind … It’s the height of all stupidity.
But if people are dumb enough to short a buyout play then let’s take advantage of it…
How to Trade The AGFS Short Squeeze
Usually, when a company announces buyout news, the stock shoots up to the buyout price, then bounces around that level with no volatility. Because the buyout offer essentially puts a fixed value on the stock.
That’s why I don’t touch them — no volatility = no trade.
But AGFS couldn’t even make it to the buyout price of $3 because shorts are pushing it down.
That leads me to think that this could be one of the dumbest potential short squeezes I’ve ever seen.
I’m not anticipating the move though. I’m waiting for a key level…
And that’s the $3 buyout price.
If it gets over that level, it rips faces off. See how you can ride the short-squeeze momentum.
And if you have questions about your watchlist and individual stocks you’re thinking of trading — I urge you to join me every morning in Pre-Market Prep.
It’s the fastest way to get access to me for advice, my top stocks to watch, and trading plans.
Sign up and get a whole year of access here.
Have a great day everyone. See you all back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade