What’s the deal with Camber Energy?
Do you like fireworks? Big? Well, I have a stock for you: Camber Energy (NYSE: the).
Camber Energy is a little-known independent oil and natural gas company based in… somewhere other than Houston, Texas. It is a fairly typical oil company, with approximately 133,442 million barrels of oil equivalent and 207,823 million cubic feet of natural gas reserves.
Not bad, but not bad enough to play with the big boys in the oil industry.
Honestly, Camber Energy is one of the less notable oil companies that I have come across lately. There is no disruptive game. There is no alternative energy movement. Nothing but a small oil and gas company.
So why are we talking about Camber Energy?
Because CEI shares exploded more than 1,200% between August 21 and September 30. Then CEI shares imploded 81% in less than a week before rising 95% again on Thursday.
In the name of Texas tea, what’s going on here?
Well, this being the era of meme stocks and
Hitting the short sellers, I think you have an idea.
Camber Energy is his latest “meme stock”. Say hello to everyone!
Camber: Saved by the bell?
So how come CEI shares, which hadn’t traded above $ 1 since March, took off like a Walt Disney World fireworks display?
It all starts with the Twitter user MrZackMorris, a self-styled “FURU Master” – that’s a “false guru” for those who wonder. Morris has around 560,000 followers on Twitter and, in late August, took aim at Camber Energy, citing massive short interest.
For newbies, short interest measures the number of shares in a company that have been borrowed and sold short.
Short selling is when someone borrows your stock, sells it, and then waits to buy it back at a much lower price. The short seller then returns those borrowed shares and keeps the difference.
As you may recall from previous meme stocks like AMC Entertainment and GameStop, short interest is the crucial factor for most of these types of trades. Meme stock traders scour Wall Street for very short stocks and then buy them in an attempt to force short sellers to buy back their positions to limit losses.
Remember, those short sellers have to return those loaned shares to their rightful owners. And a little squeeze is when those short sellers rush to buy back their borrowed stock to avoid big losses.
As you can see with CEI, a short compression situation can have a ridiculous effect on compressed stocks.
So how many CEI shares were shorted to make this 1200% rally possible?
Officially, not so much, if we are honest. Based on short selling data, as of September 15, only about 24% of Camber’s float, or shares available for public trading, were short.
Sure, that’s a pretty big amount of short stocks … but it’s nothing extreme in my experience.
I mean, Workhorse Group (Nasdaq: WKHS) currently has more than 38% of its float shorted, and WKHS shares are not coming off the walls of Wall Street like a five-year-old at Red Bull High.
Why does the CEI stock rotate as if someone had plugged their pacemaker directly into an outlet? Because the officially reported short interest does not seem to match the number of shares of CEI supposedly short-circuited.
According to Matthew Tuttle, CEO of Tuttle Capital Management, 91% of Camber Energy’s flotation is Really sold short. Tuttle says he uses proprietary data to see this “real” level of short interest. MrZackMorris apparently came to the same conclusion just over a month ago when he began his crusade against CEI short sellers.
Now if you really want meme stock traders to do their best, show them a stat like this. CEI shares are officially only 24% of their float short, but unofficial figures point to a short-to-float ratio of 91%.
Meme stock traders love to bet on short sellers who don’t seem to play fair, it’s kind of their thing.
The question you are probably asking yourself right now is: Should I trade CEI shares? Should I try to cash in on this new stock of memes?
Personally? Every fiber of my being screams: “No!”
After all, this is not investing. It is hardly negotiated. Buying CEI stock to take part in a possible short play is nothing short of gambling, and you’ll probably have a better chance of making money playing craps or blackjack in Las Vegas.
But what about the oil ?! Demand is increasing again and oil is not disappearing. Wouldn’t this cheap stock be a good move on the oil rebound?
I heard you, and I was curious about it … so I took a deeper look. And what I found was disturbing. Camber Energy is an oil company with potential prospects, but it does not have the influence or scale of the big boys in the energy sector. Also, I question Camber’s management a lot.
Why? Because Camber Energy hasn’t presented financial statements in over a year!
Those are all the red flags I need. I mean, how are you going to take advantage of rising oil prices and increased demand if you can’t even get your own finances in order?
But there is still that pesky FOMO in a dollar stock that could skyrocket if the meme traders get their way. What’s more, you could spend more on a single coffee or chocolate bar than on a CEI stock right now.
So tempting …
At the end, Big, I leave this alone. I suggest you do that too … unless you have a Mylanta or Pepto mainline hooked up to tackle all the stomach-churning moves CEI stocks will be making in the coming months.
If you decide to take a chance and bet on Camber Energy… remember to use limit orders and stop losses. Set your profit target before you trade CEI shares, stick with it and get out when it hits you.
The most important bottom line when trading meme stocks, should you choose to take that risk, is that you absolutely no I want to be the last man to hold the bag when everything finally hits the fan.
Or … couldn’t you trade meme stocks? Just a thought. If you are looking for real alternative energy games, I’ll make it easier for you.
Increasing demand for electric vehicles (EV) is also creating an increase in critical materials for these electric vehicles to roll off the assembly line.
There is only one company in the entire Western Hemisphere supplying this critical material on such a large scale. And as electric vehicles take over the highways across America … they will depend on this material for future success.
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Have a tremendous weekend break Big!
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Until next time, stay Excellent!
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