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Orient Paper: Not a Short Squeeze, Yet

BEIJING ( TheStreet) -- I had promised myself that I would not write a detailed article on Orient Paper (ONP - Get Report) until after the release of its official investigation report. Now that the report is out with a very favorable conclusion, I am glad to be writing about my favorite stock again.

As my previous articles have all mentioned, I have been positive on this company without exception, but without the report I would either be beating the same drum or engage in uniformed speculation.

A number of people read my recent article on Rino International (RINO) and noticed I no longer had a position in ONP. They were concerned that I had changed my view on the company or had concerns about the report, neither of which is the case.

I am still a big fan of ONP, as I have stated before. I was 100% confident that the report would entirely prove their complete legitimacy. However, previously I had bought a huge position in the $4 range and when the stock spiked as high as $7.77 on Nov. 9, I decided that the upside was limited until news on the report came out so I exited my position in the $7-$7.50 range. After earnings, the share price dropped into the $4 range but I missed it and I was hoping to buy on a subsequent dip.

On Wednesday (when the stock was at $5.49), the company issued a press release giving us a hint of what's to come. The press release was issued at exactly 9:30 am, right as the market opened. By 9:31, I was furiously hitting the buy button at the open and on a few morning dips getting some decent volume at average in price for the day of $5.97. I had hoped for a few more dips but the stock was a one-way street -- straight up 17%.

As a result I bought more on Friday in the $6 range and will continue to buy on Monday. I was hoping for a pullback after this 30% rally but I am quite skeptical that it will happen now that the report is out. Many people have asked whether or not this stock has moved too far too fast and have they missed the buying opportunity. I address that in the following paragraphs.
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