My Notes on “The Fundamentals Behind my $122,000 TOPS Short” by Tim Grittani 12/14/2017

Publish Date 12/14/2017

All credit goes to Tim Grittani

https://www.youtube.com/watch?v=Y1sufo33SK4

 

$TOPS

-Explains Toxic financings

-Explains short and add points that he did

-Best trade ever (swing). Was a single trade essentially.

-Took 5 days to cover.

-The conviction came from the fundamental side of it.

-He has experience with these financings from other stocks like DRYS.

-On November 8, you see the first offering. You’re looking for shares that are constantly being offered at a discount to the current price. Have to think of the other side of the offering. Have to consider the amount of shares being issued and the impact to shares outstanding/float.

-Explains the language in the SEC filing that explains the discount factor & VWAP.

-Pulls up the VWAP on the day chart and explains exactly the discount price of the day.

-Sellers outnumber the buyers because a third party constantly dumps shares out of thin air.

-Explains the fact that in October and November, the dilution had ended at that point in time which got rid of the selling pressure on the ask, which allowed it to spike at the time.

-Grittani was comfortable shorting more into gap ups because he knew the sellers were going to come in daily.

-Talks about 6-K’s that TOPS issues in which the stock did spike a little. Grittani wasn’t adding on these days, but he held short. – November 22^nd & December. Talks about the 8.8 million issuance and there was a point he wasn’t sure after the 6-k how many shares were left to issue. So he didn’t short on these days with the 6-k issuances. Talks about same situation with DRYS.

-Finviz and other sites are often wrong. You need to look at the filings, especially when you have deals like this.

-Talks about risks (DRYS cancelled their offering before). Pulls up DRYS after that news. Also talks about earnings.

 -Talks about trading this at the long side. Not the right side of the trade – you can scalp it but you’d be at a disadvantage.

-Long term holders on the long side are clearly losers here based on the filings.