I wrote about CREG back in June of 2016 expressing the opinion that shares were undergoing "smart money accumulation". I called it a thesis, for lack of a better word. It was written as CREG was trading close to the $1.00 mark after having enacted a 1:10 share consolidation to regain compliance with the rules of the Nasdaq exchange.
Is a reverse split ever a good thing? China Recycling Energy (CREG)
That was a while ago, and until Thursday and Friday of this week CREG was about as boring a stock as you could find. Typical volumes were low, pathetically low. Most days saw just a few thousand shares changing hands. A day with volume of 100K could be considered huge. But that's nothing compared to the 50+ million that traded during the last two days.
So, why the sudden surge in interest? Firstly I think its important to note that, as per the most recent corporate filing, there were only 8.3 million shares outstanding as of August 9th 2017. That's right, just 8.3 million, which means that the volume of the past 2 days of trading exceeded the number of shares by a factor of more than 6.
Also from that same filing total current assets came in at $83.3 million, which on a per share basis is
a little over $10. I'm not pointing that out as a suggestion for a possible price target however. These numbers are from the 10Q filing for the period ending June 30th 2017, and we're now in November. Its very possible, and likely in my opinion, that there have been substantial changes to the fundamental picture.
Here's a link to that filing:
That filing came out on August 11th, which means that the 3rd quarter 10Q should be coming out any day now. However realize that the 3rd quarter ended on September 30th just passed, so information in the new filing will still be old, just not as old.
If you're reading this miserable and pathetic little blog in hopes of finding a diffinitive reason for the sudden increase in trading, well you're going to be disappointed. That's not to say I don't have an opinion, I do. I think it has a lot to do with the news of China Energy Investment Corp signing a Memorandum of Understanding to invest $83.7 billion for various projects in the state of West Virginia.
Here's a link to that news:
To be clear, as far as I'm aware China Recycling Energy Corp which trades on the Nasdaq under the symbol CREG, I do not believe there is any connection with this publicly traded company and China Energy Investment Corp, none whatsoever.
I do however consider it likely that Wednesday's early morning news about Trump's visit to China and the $250+ billion in trade deals signed, that this was the spark which sent CREG on its wild ride. Here's a link mentioning the trade deals in the context of President Trump's visit to China.
If you were to search for publicly traded companies with the words China and Energy, then CREG would probably be top of the list. And then.....in my opinion High Frequency Trading (HFT) takes over. And with CREG having such a small float, and trading at an incredibly depressed level....its the perfect storm.
I've already blogged on here about BOTs that monitor the POTUS Twitter account using algorithms to determine if a Tweet about a public company is positive or negative, and taking out a corresponding long or short position automatically. Its all done in seconds, that's the world we're in now.
We'll see what CREG reports when their filing comes out. Regardless of the reasons this quiet and almost invisible little company now has a lot more people watching it. As PT Barnum famously said, "There's no such thing as bad advertising". With the float being so small here the party might only just be getting started, we'll have to wait and see what the quarterly filing says. If the numbers are less than inspiring however, things might just start dropping off fast.
It was with this realization that I sold a little over a quarter of my CREG shares on Wednesday. I didn't get the top price, nowhere close, less than $6 in two trades. We'll see what happens next week, no matter what happens though I will probably end up having some regrets. If the PPS goes to $20 I'll wish I hadn't sold any, and if it falls back to $1 or $2 I'll be wishing I sold them all.
Bottom line though, and something I constantly remind readers of....Nobody ever goes broke from taking profits.
Happy Trading.
FYI if anyone is following or cares, I'm closed out my CREG position.
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