I want to get a larger position before the short squeeze happens, so I am buying with a sense of urgency. Keep in mind that right when the Muddy Waters report was released, the stock had been driven down to $8 (presumably by shorts). So the largest short positions may have begun $9 and are not yet feeling true pain. With the stock at over $7, many people have asked if it is too late to buy ONP. I am still buying because I think it is highly likely that there is 40%-50% upside in the very near term from the current price of only $7.11. A few things to keep in mind regarding the price:
Prior to the short attack, the stock consistently traded in the $8-$11 range
As recently as Nov. 9, the stock hit a high of $7.77 -- even with no news of the report
ONP's high for the year was $15.15
ONP has a current market cap of only $130 million -- this compares to Rino which has a market cap of over $170 million
Roth Capital previously had a target on the stock of $16 As for Roth, I think it is notable that they never switched to a sell recommendation or lowered their price target. As with most institutions, I assume that they are simply waiting for the release of the final report to reinstate coverage. This strikes me as a very appropriate institutional approach given the amount of controversy and uncertainty generated by short sellers. Once Roth reinstates coverage, I think it could provide a significant boost to the stock. Other high profile situations which currently have litigation pending include Fuqi International ( FUQI), China Northeast Petroleum ( NEP), China Green Agriculture ( CGA), China Natural Gas ( CHNG), China Biotics ( CHBT) as well as accounting questions on China Agritech ( CAGC). Once I get the chance, I expect to do some follow-up on them as well. Disclosure: The author holds a long position in ONP. The author can be reached at firstname.lastname@example.org.