Sensing A Big Move For InvenSense This Week
Jul 30 2013, 14:26 | about: INVN (InvenSense Inc)
Disclosure: I am long INVN. (More...)
Executive Summary: InvenSense ( INVN) is a high-growth company at a reasonable price. The company reports earnings after the market close on Tuesday, July 30. A recent rise in short interest will result in a very lucrative short squeeze in the event of an upside surprise, and cushion any drop in price should earnings disappoint. I see at least two possible trades with asymmetric risk/reward as a result.
I have detailed the long-term buy thesis for InvenSense in the past and provided updated assessments on both the risk factors and growth catalysts for the stock. To summarize briefly, INVN is uniquely positioned to profit from society's gradual shift from mobile computing to wearable computing. Technological advances, from conductive nanofibers, which will allow for constant charging from body motion, to low-power displays make this trend almost inevitable, in my opinion. Wearable computing, will in turn usher in whole new wave sensor usage which goes far beyond smart-phones. Inclusion of InvenSense products in Google ( GOOG) Glass and other wearable devices is just the tip of the iceberg confirming the company's leadership in this trend.
Big Gains This Week?
The most recent bi-monthly short data has been released and whereas the short interest for most of the squeeze candidates I've been tracking has remained flat or decreased, INVN's has risen over 20% to over 26% of shorted float. This means that the short positions are easily at their highest in a year and more than 43% higher than the average of 9,454,677 shares held short over that time period. In addition, average daily share volume for the stock has fallen by over a third, which results in a near doubling of the days required to cover such positions. The squeeze potential of this stock is further validated by the short rebate rate more than doubling from its historical norm of .28%
Date
| Rate
| 25-JUL-13
| 0.61
| 24-JUL-13
| 0.61
| 23-JUL-13
| 0.61
| 22-JUL-13
| 0.61
| 21-JUL-13
| 0.61
| 20-JUL-13
| 0.61
| 19-JUL-13
| 0.40
| 18-JUL-13
| 0.40
| 17-JUL-13
| 0.28
| 16-JUL-13
| 0.28
|
(The other half of the article requires registration)
seekingalpha.com |
