First off, I am LONG on SOS Limited.
The reason why I am sharing my DD is because I want everyone to be informed and to be rational.
I am a traditional value investor that recently took interest in meme/momentum stocks and so I am actually very fascinated by what I've been able to learn/discover in this niche through researching SOS Limited.
I won't comment too much on the company from a fundamentals-standpoint, because I can see clearly that this company is massively undervalued.
DD:
Based on my research, what's happening to the stock right now is price manipulation by a few hedge funds.
If you pull up SOS Limited's SEC filings (sec.gov), you can see all of their detailed information on financials, including details of their direct offerings.
You can look up the information yourself, there's quite a lot of filings and documents you have to read through, but this type of DD is a standard routine for the value folks.
What was interesting to me, is that one of SOS Limited's recent registered direct offerings was purchased by Intracoastal Capital, LLC.
The basic question I wanted to answer was -- who are the institutional investors that are buying these shares? What are the terms of the arrangement and are they long-term shareholders?
So I dived deeper and googled Intracoastal Capital and learned that it's a hedge fund owned by Mitchell Kopin and Daniel Asher. And they own about 9.99% of SOS Limited (the 9.99% is important, remember this).
They are quite infamous, in fact, for their SHORT strategies, and there's quite a few Reddit posts in /pennystocks and other subreddits about them shorting other companies down to the ground.
I kept peeling the onion layer little by little, and learned that Intracoastal Capital often attack companies together with other hedge funds such as Anson Funds Management, Sabby, and Hudson Bay Capital.
If you google these other hedge funds, especially Anson and Sabby, there's quite a lot of articles about their corruption and short attacks as well -- a lot of people complaining that they should be reported to SEC.
Well guess what? Intercoastal, Sabby, and Hudson Bay Capital are all the largest shareholders of SOS Limited.
Here is a lawsuit involving Intracoastal and Anson, it's further proof that these short hedgies often work together:
https://casetext.com/case/sharp-v-intracoastal-capital-llc-in-re-blue-earth-inc
Here are the recent filings for SOS Limited:
https://sec.report/Document/0001213900-21-010079/
https://www.streetinsider.com/dr/news.php?id=17922552
My god, they all own a lot of shares. What is going on here? Why are they the largest shareholders of SOS if they are known for shorting companies?
Here is where it gets super interesting:
In summary, these funds basically participate in direct offerings under the disguise of investing in the company or helping the company (pretty sure at this point the CEO of SOS Limited is clueless about their real intentions).
By owning less than 10% of the company, these funds do not have to report their short position.
They basically short the company behind their back in orders of magnitude greater than what they put into their long position.
https://www.sec.gov/smallbusiness/goingpublic/officersanddirectors
They intentionally attempt to sabotage the company through various devious methods.
They also have buffer on their long position due to the warrants, the mechanics of which I won't go into here.
This should help explain all of the bear posts in social media that have been going around lately.
In fact, if you google Moez Kassam and Anson Fund, you'll find that even the man himself talks about trading based on sentiment and controlling them through social media, especially because retail traders are now taking an outsized role in the market due to COVID/everyone staying at home.
Anson Fund returned 44% in 2020, one of his largest returns, and he brags about being one of the earliest funds to manipulate retail investors.
I'm pretty sure at some point, the hedgies are going coordinate and dump their SOS shares all at once to create massive panic in the market and bring the stock price down.
They will time it to near-perfection, since they are large shareholders and have insider information that the public is not privy to (e.g. imminent PR release).
We will be left wondering, why did the stock plummet when a huge PR just got released which should have sent this stock skyrocketing?
More panic, uncertainty, and doubt will ensue, and people will start selling, driving the stock down even further.
These hedgies are doing the exact same thing to XSPA right now with Citadel.
Yes, you read that right. Citadel, who was involved in the GME scandal.
For context, XSPA is a COVID testing copmany, and these shorties have been trying to destroy this company during the middle of the goddamn pandemic.
They are literally killing people. Literally.
https://www.reddit.com/r/WallStreetbetsELITE/comments/l7i3ic/citadel_short_gme_along_with_sabby_and/
SO WHAT'S MY STRATEGY?
I am buying more on Monday, because (1) I believe Bitcoin, and (2) this company is significantly undervalued relative to its competitors.
I trust my DD, and as long as the Bitcoin thesis continues to hold, then the market should recognize that SOS is massively undervalued.
In the short-term, there are 2 likely outcomes.
#1 -- the hedgies win and drive the share price down even further, i.e. next week, but that's fine because as long as Bitcoin holds or continues to goes up, they will have no option but to cover their short position and lock in their gains sooner rather than risk unlimited loss later. That's just basic risk management, I fully expect them to cover soon given the current momentum of Bitcoin.
After that point, the price should skyrocket.
#2 -- Bitcoin continues to go up more quickly than anticipated, and everyone scrambles to buy more shares, and hedgies have no option but to cover. Effectively the same thing as being squeezed.
After that point, the price should skyrocket.
Note that the aftermath of both #1 and #2 is skyrocketing price.
- I'm not going to try to time my entry if the share price were to go down even further (scenario #1), because I don't know what the floor price will be, and I don't know when it will spike 90% in a single day again.
- The risk of missing out on gains like that are far greater than trying to min/max my entry.
- Besides, that's only in the event that scenario #1 were to occur.
- If scenario #2 were to happen, then I'm also screwed, I will have missed out on a majority of the gain.
The greatest tailwind we have here, unlike GME or XSPA, is that time is on our side, more so than ever before.
If you believe in the Bitcoin thesis, then hedgies only have a short window of time to make this coordinated short attack while Bitcoin continues to hold or go up (or god forbid, go parabolic).
IMPORTANT: There is a risk of ruin, in the event that SOS indeed is a scam, but that risk has been greatly lowered because now I know that there are hedgies that have been desperately coordinating together to create FUD.
I believe that this situation, ironically, has created an extremely favorable risk/reward opportunity.
Only 2 things need to align here for me to make an astronomical amount of money.
SOS has to be legit, and Bitcoin has to HOLD (at minimum). And as time goes on, this risk continues to go down every day.
Possible scenario #3 --
Hedgies cover quickly, realizing that they underestimated the power of Bitcoin in their model, or because the price continues to go up due to me posting this to all the subreddits and generating awareness, which causes people to buy more.
TLDR: I believe SOS is a 5x-10x bagger. I'm buying more.
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