Okay folks, so we got to give a violent update on the market and place. and then I want to cover one particular 2.74 stock that after today's sell-off may be prime for a new run, and a lot of folks have asked that I talk about it. Hcdi is the next squeeze stock Hcd. I check it out.

Please break down Hcdi Charlie. Boy, Hcdi reminds me of my high school sweetheart, but a lot more loyal. These are just some of the comments we got on the sticker. so we gotta cover it when they'll summon Charlie to a squeezy Mcsqueezer.

Charlie must answer it. Let's get to work Okay, Marquette to mix back and forth. nothing crazy. Slightly up on the day, Airbnb reported a nice beat in revenue 70 revenue growth as travel rebounds, you had Starbucks the buck of starbs suspending outlooks as coveted lockdowns have hurt their sales in China.

We were talking about some of the closures in Russia, but I completely forgot the bigger problem, which is really those Chinese lockdowns. Starbucks is like, hey, we don't know what's going to be happening in that major market, so we're just going to go ahead and stop giving guidance on it. Although their U.s market strength was pretty damn hot. Next, moving on, Amd sales jumped 71 percent.

I guess we aren't going to be getting our juicy discount on that one. at least not yet. Left just destroyed, it got totally de-lifted down 26 in the after hours on numbers that actually weren't really that bad. Their ride healing volumes hit new coveted highs, and they beat expected earnings and revenue.

But hey, their guidance was weak. You cannot have weak guidance in this market. This is a market that's looking for any reason to sell, and sometimes they don't even need a reason. But if you give them a reason, oof, that button is going to be broken real fast.

Going over to squeeze setups, Redbox showing itself to indeed be a box of red. I originally anticipated this take profit period coming on Monday, but we ended up having a pretty strong run yesterday. so we ended up getting it today. and my forecast last night was that if you saw this break down below eight and seven dollars, in all likelihood it's going to be dead after a pretty damn successful run.

I mean, this stock went up a lot faster and a lot higher than I anticipated. However, the fact of the matter is that we did show some retention on that 650ish 648ish level. although that broke in the after hours, and I wouldn't say that all hope is lost for Redbox. but I would say that odds are very, very strong that without a significant catalyst which I don't know what that would be, or without some sort of active Zeus, this probably isn't going to be restarting, at least not from these levels.

We'll keep you updated if something changed with the setup, but at the end of the day, I mean, pretty happy with how Redbox went, even if you were late to the game, it was still a pretty fun run. Dr. Seuss himself said, don't cry because it's over, smile because it happened now Outer Gator. I was fairly happy with this today.

It sold off a few percent, but you look at that red directional Sma line, it's holding that overall upward direction. I think there's plenty of room to get a breakout attempt before Friday's expirations. That said, sometimes it does feel like we're racing against the clock to hold relevancy. In a lot of these squeeze stocks, squeeze stocks tend to be held up by spec capital, and Spec Capital isn't the most patient of capital.

Sometimes if momentum can't really pick up, people, just decide. Okay, you know what? I'm going to go ahead and lock in my profits and go home. And you see that on a market wide level. That's when all of a sudden, the squeeze setup dies.

So far, the lovely little alligator has had a long-winded run and it's done very well at holding momentum. But the minute you start seeing this momentum die off and break direction, that's when you got to start thinking, okay, hey, the risk is climbing dramatically right now. So far it's not cracking though. Sometimes I read comments and people are like Charlie.

I don't understand why you say if it holds this level or it doesn't hold that level, that's bullish or bearish. Well, the reason is because if it doesn't hold a certain level then all of a sudden you know that the market's conviction in the stock isn't enough to keep it in the squeezed territory. That's why it's so important to look at crucial levels when it comes down to these stocks, because I don't necessarily know just by looking at the charge when people are going to decide. Okay, now it's time to surrender and sell out all the shares.

Or now it's time to fomo in. What I do see though, is the squeeze setup in terms of how many shares are short, how much the float is, or at least the data that we do have for Vortex and I could look at previous history and try to gauge future behavior and also look at how much exposure the stock is getting in bringing in how much volume. But I can't really say when people are going to decide okay, I'm going to take profits here or there, or when I'm going to start following in. So what we do is we set certain criteria that says okay, well, it needs to hit this bare minimum proof of concept in order to be realistically able to continue on to a new breakout with Atran Redbox.

That's what we've done every step of the way, right? And now that Redbox isn't showing that proof of concept anymore, and it's starting to bludgeon below those crucial levels, I'm like, okay, well, the odds are now moving more and more against it doesn't mean that it's not going to come back, but it means that if you look at it from a hundred different stocks that do this, most of them end up just dying. Okay, now for the main entree that folks wanted me to cover H C D I Now this one is an entertaining change of pace for a few different reasons. Number one: it's a real estate company, and it's really, really easy to calculate the net asset value of real estate companies and how much money they're bringing in, how much return they're getting as compared to other players in the niche, and whether or not that's reasonable for the stock versus a lot of other companies, it's a lot more foofing. It's also interesting because it rallied huge yesterday and then into extended hours and then just dove dramatically and erased all of those gains and put us back to around Friday levels if not lower by the time you watch this video.

Which means we are now at the stage where markets are deciding if H C D I is dead or is just temporarily beat down and is about to try for a new breakout rally later this week. And usually when I analyze my favorite setups like the ones that we just did with Adder and Redbox, I argue that collapsing past previously fought for Battlegrounds is one of the telltale signs that the momentum is more likely dead than it is to rebounce and come back. However, I think if you look at the setup here, you might get a new momentum cycle fairly soon, as soon as perhaps the 12th when they are reporting earnings. So what's my raw Dd on Hcdi? Well, this is a small but regional homebuilder short squeeze candidate.

They said today they are planning on building 640 apartment units in the Puget Sound Washington region over the next two years. How do you pronounce Pujit? We don't learn that type of stuff in Southern California. We don't learn much at all. Their financial stats are quite interesting, they have 44 year-over-year revenue growth, and their market cap is 36 million dollars.

Pay attention to that number because their cash on hand is 26.2 million dollars as of your end. Which means you are only paying a 10 million or so premium over cash for the rest of the business and its assets and its strategy. Their geographic areas where they have real estate holdings include Florida, California, Washington, and Texas, but mostly Washington. And this is where it gets really, really fascinating.

So on top of that, 26.2 million in cash, you also have 122 million in total real estate holdings across all geographic areas. And you do the math and subtract assets from liabilities. It comes out to just under 100 million dollars in assets 99.74 million ish. And then for total yearly revenue you have 72.3 million reported from 2021.

And then you have net income or profit at 8.8 million in 2021.. keep in mind, with most small cap stock, you don't have any profit at all. In other words, Hcdi trades at about just over one third their net asset value, one half their yearly revenue, and four times their yearly profit. Which means that essentially for every dollar you're buying in this, you're getting about three times a little bit less, but about three times that dollar in net asset value.

It's sort of like buying profitable real estate properties plus cash for a little bit more than one-third the price, which is a pretty good fundamental value if you think about it that way. That said, what is the short thesis here? Because short sellers? they don't short things for no reason, right? Well, first, it's the blanket short of any small cap company, regardless of what the company does or its numbers. A lot of short sellers short things algorithmically. they have certain criteria.

Is it a small cap? Is it a medium cap? Is it a growth company? If so, doesn't matter. Don't look at the company, just go ahead and blanketly short it. That sort of trading has led company after company to go down below their net asset value and sometimes even below their cash value. And then there's the obvious and more logical thesis here, which is that interest rates are going up probably dramatically, and that is going to threaten valuations for real estate property and more importantly, increase borrowing costs for the real estate industry and the development of real estate industry, which of course, directly impacts Hcdi.

If Hcdi is going to go and develop more huge properties, while raising interest rates hurts their borrowing capability first and foremost lowers their profit margin and also risks an overall reduction of valuation in their currently held assets. and we can speculate all we want about where the real estate market's going to go. To me, it makes sense that valuations are going to go down because interest rates are going up and it makes it less affordable to buy a property, but there's also a limiting of supply, so you have some floor on that. but that's kind of outside of the scope of me talking about the squeeze setup, the real direct threat and thesis here is how much real estate and developing financing costs are going to go up, because those are the biggest things that impact the business model here and could hurt the fundamentals behind this business.

But their debt to total capital ratio is only 22.5 right now and again. this is a profitable company, so it's hard to argue that this deserves to be trading this far down below net asset value, even if you think we're heading for a really, really big crash. I mean, if you think about it, interest rates are still pretty damn low right now and can allow any company that wants to get a good deal on financing to still lock in a good rate. Not as cheap as it was a year ago, but it's still not terrible.

If you can't operate in this environment, maybe you shouldn't be running a real estate business. And in terms of valuation worries, I mean the 2008 housing crash, which was one of the worst housing crashes in the last hundred years, had a huge declines peak to trough some markets that Hcdi operate in like California we're down 42 percent, Florida down 50, Overall 33 on average. And that was a housing crash. The housing crash that stemmed the overall issue.

And sure, if you're in team recession and team valuations coming down for real estate, then maybe you think that you're going to have a bludgeon in real estate prices again. but to that extent, probably not. And if so, at what point have you already over factored in that risk? It's allowing us to trade at almost one third of its net asset value. Enough of a discount? I'm surprised the bigger real estate company hasn't already bought this up.

But anyways, that's what you're looking at in terms of short thesis. Now, keep in mind that it has been on Fintel's short squeeze list for several weeks. Vortech shows short interest of free float at 30 percent. Free float on loan is only at 42.

I think this is a harder one for shares to be lent and a lot of free float probably won't even be lent on this, so it means a weaker short seller position. But utilization so far in terms of what has been found is about 100. To be honest, if you look at everything in totality, it's not the most extreme short squeeze setup that we've seen, but short interest is near all-time highs right now according to Ortex, and it's been on a very, very steady climb, which is kind of crazy when you consider the value that this company has behind it. Oftentimes the best short stocks are ones that don't have tangible value.

When it comes to a real estate company, it's very easy to see the tangible value because you can look at the assets. You can look at how much money the assets are producing, You can look at the debt usually what short sellers and bear analysts who sometimes work with the short sellers. Oh, I didn't say that. who said that? But a lot of times what the focus on are intangibles like the leadership, the growth strategy thought about the industry.

They'll connect two and two pieces together that make no sense but cause people to panic thinking the company's a scam. If you're talking about a small cap that's working on some new technology, it's really easy for short sellers to say oh, the technology is a scam doesn't work or they were misleading about that technology. Or oh, that technology. The competitor next door has a much much better version.

with real estate. you got numbers in front of you, so the only thing they could say is, well, I think they're not going to be able to manage it properly anymore. I think that their rough strategy is too aggressive, but again, that's a really hard pill to swallow considering their insane growth from year end 2020 to year end 2021. And I think you're going to see more evidence of that in the earnings that's coming up very soon.

When you get to a certain point and you're trading at again almost one third of the net asset valuation, and you've seen a huge proof of concept in terms of scaling up. All of a sudden, you start asking, wait, how far down do short sellers want This Is this supposed to go bankrupt? Look at the damn net asset value. I mean, look at how good the numbers are. They're profitable, so in totality and practically speaking, right now, the market is trending against the stock and macro factors are also trending against it.

But it's shown proof of concept of being able to rally and squeeze sellers, and I think that if you look at the fundamentals behind it, it's kind of a head scratcher of how far down they think that this needs to go. I understand why short sellers attacked Redbox heavily. It makes sense the business is trash, but with this one, I'm looking at It and I'm like, really, this is the stock you choose to short. It's probably more algorithmic than it is anything.

I bet very few people that are short this have even looked at the company outside of just putting in variables on a computer, and even if they did look at it, the bet is probably that those macro factors with interest rates are just going to hurt this company beyond repair until the environment switches again. But I think that when you consider the short squeeze setup it does have and the proof of concept that it does have and the fundamental value that it does have, I think that odds are strong that once this settles down, whether that's at 2-5 or 2, or even back at 1 8, you're probably going to see a rebound rally. I think if you were in a fair and normal market condition, this could easily be trading at like three times the current price and I'd be like yeah, that sounds like a decent valuation. That sounds appropriate, but in this market everything goes for short sellers.

No amount down is enough. if a stock is above zero, it's too expensive, and that game is very, very effective. But it stops being effective when people start realizing that you're trading at valuations that just don't make much sense. and I think that's going to set it up for more opportunities to rally probably in the next couple of weeks.

Wait until the sell-off period is over, and then look for some proof of concept and I think you're going to see some trading opportunities. Can't say that it's going to go to new all-time highs or anything like that, but I do think you're going to see some sizable runs anyways. folks that gaps off today's video. If you have any questions, feel free to reach out to us below or join us on Zip Creator Circle.

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