To put it bluntly, AMTD Digital’s (HKD) IPO has dramatically transformed the low-float IPO landscape since it charged from the already absurd level of $49 on July 27, 2022 to nearly touching $1,000 on August 1 (after pricing their IPO at $7.80 and debuting on July 15, 2022). In the same way that GME’s historic short-squeeze set off a barrage of imitation squeezes on all highly shorted equities back in January 2021 and continues to trigger insane runs in various iterations across SPAC, bankruptcy, and other incarnations – HKD has already inspired pumps in recent low-float IPOs and is likely to encourage traders to pile into upcoming debuts in hopes of catching the sequel.

The FOMO and MOMO (FOMOMO) are likely to provide enough impact to concoct a series of self-fulfilling prophesies in fresh low-float IPO issues, at least for the short term, and until enough day traders figure out how to buy he debut to the point where lofty debut premiums wash out any potential upside as the trade gets front-loaded and played out. Those of us who have been trading these setups for a while understand that there are huge differences in how these deals are distributed through the brokerages that have a major impact on how each IPO will trade, and there are quite a few hints in the pre-debut imbalance of each IPO to clue us in on how well it will perform.

For example: in the case of HKD: apparently the underwriters announced the issuance of 16M shares, “allocated” them to brokers, and then pulled their ADS (never actually delivered the shares). Brokers clients then called in to sell their shares, brokers sold, and then never got their shares, so they were put into short positions. With 88% of the shares held by AMTD, all they had to do was hold their shares tightly, and sell them to the manufactured shorts as the share price skyrocketed.. that’s one theory anyway. But points out that we are unlikely to see this setup repeat itself, and so the hope that we’ll see “the next HKD” is rather wishful thinking.

But we are likely to see intense demand for the next few low-float IPOs, which, by nature, are limited in supply to begin with. When demand exceeds supply, prices go up, and so I expect some prime opportunities in upcoming debuts. Add a Stealth element to the mix, and those are the trades where I’ll be looking to take larger position – provided I get the debut setup I have learned is typically correlated with a substantial upside run.

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This Week’s IPOs:

• Bruush Oral Care (BRSH) – August 2, 2022 | 2.47M
  

• Magic Empire Global (MEGL) – August 5, 2022 | 5M Shares
  

• Onfolio Holdings (ONFO) – August 5, 2022 | 1.7M Units
  

• Jianzhi Education Tech (JZ) – TBD | 5M Shares

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Ok, Let’s jump in:

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