Let the Reddit Rally begins...

Yesterday was a “typical” short selling tactic: crashing the price down 10-15% and trying to cover the short at $0.70. Existingly there are already short positions as observed by Rocket, yesterday move was a “desperate” move to try to shake more sellers to cover its short. For illiquid stock like OMH, it is easy to “crash” the price, but on the flipside, there is no liquidity to buy on the way up. This opens the short seller (holding a bigger and bigger short positions) to huge risk should a “REDDIT Rally” on OMH comes along.

Now, the shorter is trying to cover back at $0.70-0.73, but there are not enough sellers, its a classic reverse short sellers' TRAP in illiquid shares with strong fundamentals/undervalued counters like OMH.

Like I mentioned earlier, OMH is the “wrong” counter to short as (i) it is already undervalued at only 3-5x PE on FYE 2021/22 vs peers like Press Metal Bhd (PE 72x) and Lynas (still loss making and yet share price hitting all time high) and Ferroglobe (up 70-100% in 2 days) (2) fundamentals is clearly supported with the surge in ferroalloy prices (FeSi at $1,500++, which translates to whopping 50% profit margin) and the cashflow/profit will flow 2018 when the company recorded $160m profit (iii) although share price has doubled from $0.34, it was way over corrected, and at $0.70/$0.80, it is still 50% below its recent high of $1.70 (iv) the commodity cycle is on multi-year uptrend (Goldman Sach) as demonstrated by the FeSi price surge of 50% (v) the Bursa listing will unleash the publicity/liquidity that OMH sorely needs.

On a positive note, this could help to inject some excitement to OMH stock (otherwise a dull/sleepy stock that has not much followings), especially when short squeeze comes along. Stocks with some speculative elements/excitements bring zest/energy to the counter.

Let the Reddit Rally begins….