Akoustis DARPA contract and trading notes +3

11:59 24-Jun-22

A few more notes to hopefully close out the week...

The rebate rate on HIMX has more than doubled again to top 70%, making a short squeeze all the more likely.  In addition, the rebate rate on XEBEF is up to almost 129% and PSNY is above 15% in its debut.  There are no guarantees, though; the rate on VUZI is also up to 49%, and OEG is almost 24%.  I wouldn't touch the latter two, even in a technical bear trap for those who overreacted to the Fed.  We're seeing the rotation into defensive names that I looked for in the former link, with rebounds in LUMN and CWEN(A), but no relief in natural gas yet.  Lumping that together with oil is the clearest mistake I can see in the market right now, even in the face of the energy industry getting creative.  KNTK might see some relief with the next report and dividend in early August, and New Fortress will report around the same time.  However, the onset of winter is more likely to bring the real payoff.  The same goes AMSC, as its Chicago REG deployment will pass the 1 year mark in September, which should start to clear the way for new orders.

In the meantime, I'm eager to see what Congress gets done with domestic semiconductor stimulus.  My take is that it will manage something before the August break, and that will prove positive for MTSI and AKTS.  INTC almost got down to $36.50 recently, which would represent 4% yield.  The angst is well-deserved, but a move below that level as volatility returns would start to look interesting for me, even though the company still has a long road ahead.

In short, while I don't trust the general market rebound to last long, I also think the process of sorting winners from losers has barely begun.

Quick update: the rebate rate on HIMX doubled to over 30% at the open.  This opens the possibility of a short squeeze, even before earnings, between tomorrow's weekly options expiration and the June 29th dividend ex-date.

On 6/23/22 09:34, Esekla wrote:

Akoustis has announced a new multi-year multi-million dollar DARPA contract to extend XBAW operating range to 18 GHz.  As with last night's Xebec contract, the amount is less important than the advancing technological capabilities.  This has been in the works for almost a year.  When it was first mentioned, I was waiting softer pricing for AKTS.  We've been there for a while and now its just a matter of waiting for a larger player to take action.  The same continues to go for AMSC and MTSI.

Of more immediate interest is that the HIMX rebate rate jumped to 15% following the company's warning.  That's a percent above the yield.  We often see this sort of behavior in exchange traded bonds and it indicates that the stock may recover more quickly following its ex-date.  In fact, I wouldn't be surprised to see the stock return above the $10 level surrounding earnings.  At the very least, I appear correct in my speculation that the warning had already been priced in.

We've also seen a rebound in Polestar now that the transition from GGPI to PSNY is official for tomorrow.  Its rebate rate is also slightly elevated at 3% and the company has added a state of the art drive train, probably based on the recent patent, to the light weight chassis both of which will debut in the 5 model commercialization of the Precept concept, planned for2024.  With other EV efforts floundering, I see Polestar's mature and asset-light manufacturing model as an even bigger positive for the company to capitalize on what should be a supercharged growth market.

None of this supersedes my views on my natural gas picks, as the war drags on and Europe makes the symbolic move of approving Ukraine for candidate status in the bloc.  Germany's shift to Phase 2 emergency status is similarly, just a recognition of reality.  I'll continue to prioritize those investments through the current weakness, along with VIRT as trading volume picks up, and mostly ignore developments like eMagin touting unquantified contracts with existing customers, Orbital OMIBs, and Schlumberger efforts to go green on shore.