Report Card #13

Dear L.,

today I learned about A+ trade setups. When these setups present themselves, one should size in (which I did not do) and take full advantage of these gifts (which I partly did).

The last few days have been incredible in the small cap world. Therefore, my watchlist was quite full this morning. On the top of this was LTBR (Lightbridge Corporation, Basic Materials Sector). LTBR gapped up more than 70% on patent news (not very impressive ones). I checked the fundamentals and fell more and more in love with the short trade. Firstly, LTBR´s fundamentals are… let´s say they are questionable. Secondly, with a float of well above 20 million shares, the danger of a pump was very limited. Thirdly, there was one incredible fundamental aspect to this trade. In March LTBR entered into an “At-the-Money Issuance Sales Agreement” with an aggregate offering price of up to $50m. This means that shares will be dumped into any spike. From the perspective of demand and supply, supply will greatly outweigh demand. I expected LTBR to sell off all day.

Recently NBRV was a similar setup. This is what happened to NBRV.


My plan was to directly short LTBR when the market opened with a risk of the pre-market high. However, I did not think about the fact that LTBR most likely would not wait until the marked opened to sell off. Instead, after hitting a high of just over $2, LTBR grinded lower and lower during the pre-marked trading session. I was aware of this great opportunity and even though I had promised myself not to enter the trade premarket, I chased LTBR on weakness and shorted 2/3 of the planned size at $1.63. Of course, one may say that the decision to trade pre-market given the circumstances was mental flexibility and necessary in this case and I agree to some extent. However, I did chase weakness here which is not acceptable.

LTBR sold off more until the opening bell rang. At this point it completely lost it, selling off without even bouncing once. I took half my shares off at $1.43 and the other half at $1.33, leaving quite some money on the table. At the time of writing today´s low on LTBR was $1.11.


Today, may chased entry was very bad. This is something I have been working on and I must not do this. Besides this I am very satisfied with today´s trade. However, I would have wished to be in this with bigger size. Today was a grade C.



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