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Bullish bounce inches towards a key breakout level. Will massive short squeeze follow?

Shares of Atlanticus Holdings Corporation (NASDAQ:ATLC) have been climbing off the bottom following a string of consolidating sessions and several bullish comments disclosed by the company in their 10Q Quarterly Report filed on 8/14/18.

Among them, the firm says given recent growth associated with their new credit card offerings and related receivables, they expect ancillary and interchange revenues to grow modestly throughout the rest of the year.

In addition, “We expect modest growth in the level of our managed receivables when compared to the same periods in prior years in both the U.S. and U.S. territories as CAR expands within its existing locations and continues plans for service area expansion,” reads the disclosure.

Certainly of interest to the bulls is a statement that the company plans to continue to evaluate and pursue a variety of activities, including a potential investment in other assets or businesses that are not necessarily financial services assets or businesses; and the repurchase of our convertible senior notes and other debt or our outstanding common stock.

Pursuant to a share repurchase plan authorized by ATLC’s Board of Directors on May 10, 2018, the firm is authorized to repurchase 5,000,000 shares of their common stock through June 30, 2020.

This bit of news has leading traders and chat rooms speculating that the Shorts – who currently control roughly 29% of the company’s tiny float will start to cover as volume and positive price action continue to inch up towards a key break-out level along the 50-day moving average.

Two weeks ago, prices for shares ripped higher suddenly and hit a 52 week high of $3.83 after positive earnings were reported.

Atlanticus Holdings only has 3.17 million shares available in the float. 17.7% of the firm’s shares are held by Institutional Funds and almost 80% are “very closely held” by insiders.

If prices continue to rise as traders and investors become aware, things could get interesting.

As you may recall, shares of Avalon Holdings Corporation (AMEX:AWX) soared to $26 “on no news” after the float became less available to purchase and shorts were trapped. ATLC has a very similar set-up in that there aren’t many shares available to purchase and currently, almost a third of those in the stock are short.

“A break over $1.90 is key,” alerted Cameron Newell of Normac Newell Trading.

Other winners following trading on Friday included shares of Wilhelmina International Inc (NASDAQ:WHLM) which were halted briefly following some volatility as the stock gained over 17% in value. It was disclosed the major shareholder Ralph Bartel had acquired nearly 7 thousand shares of the stock in a transaction earlier in the week.

Similarly, Arcadia Biosciences (NASDAQ:RKDA) gained 15% over their previous close following a recent buy recommendation which was reiterated by researchers at HC Wainwright.

Ferroglobe (NASDAQ:GSM) shares rose 12.5% after the company announced that it will unveil 2nd qtr financial results and their firm’s business outlook this coming Wednesday, August 22.

Mediterranean chain Zoe’s Kitchen (NYSE:ZOES) announced that it will be acquired and going private. That sent shares up 33% after it was announced that Zoe’s investors are being offered $12.75 a share in cash for the transaction.

 

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