By Bansari Mayur Kamdar
– U.S. media and digital solutions firm Insignia Systems extended its month-long rally into the final hours of December, setting itself up for the best month in decades, as retail investors scooped up shares of the heavily shorted micro-cap company.
Insignia added nearly 20% on Thursday as of 0322 GMT and has gained more than fivefold in December, heading for the best monthly performance since its debut in 1991.
The company has surged 130% so far this week, but the jump still pales in comparison to a 319% weekly rise in early December when it said it was exploring strategic options.
Insignia currently tops Fintel’s leaderboard used to track companies that have the highest likelihood of experiencing a short squeeze, while analytics firm S3 Partners estimates a short interest of 63.6% on its free float.
The Minneapolis-based company is among the top trending companies on investor-focused social media Stocktwits.com and also the third-most ordered stock by individual Fidelity investors, according to Fidelity Research.
Stocks with high short interest have been in spotlight this year, ever since individual investors coordinating on online message boards helped fuel stunning rallies in shares of companies such as AMC Entertainment and GameStop and cost short sellers billions of dollars.
Over the past thirty days, the short interest in Insignia rose by 543,000 shares, worth $6 million, said Ihor Dusaniwsky, managing director of predictive analysis at S3 Partners. There was slight short covering last week with 16,000 shares worth $182,000.
“It has to be long buying,” said Dusaniwsky. “This is a stock with a small market cap, small float and tiny amount of borrows available – there will be virtually no new short selling in this stock due to lack to stock loan supply.”
Insignia had 1.77 million shares outstanding and a market capitalization of $40.7 million as of Dec. 29, Refinitiv data showed.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Alden Bentley and Aditya Soni)