Shares of Tilray (TLRY) have now spiked up by more than 10x from its recent IPO price. The reason is simply that the short interest became too high relative to the float (likely hitting as as much as 80% or more). As always, the Tilray ”infinity squeeze” caught everyone by surprise. It always does.
In this report, I first illustrate the numbers which sparked the Tilray squeeze. I then show how and why infinity squeeze potential appears even more extreme at Revlon (REV) than it did at Tilray. This is specifically due to recent changes in ownership and short interest,
The float has always been very tight at Revlon, with billionaire Ron Perelman already owning over 84% of the company. A standstill agreement which precluded Perelman from taking his stake to over 90% of Revlon just EXPIRED over this past weekend.
In recent weeks, Ron Perelman has continued his purchases of Revlon, acquiring an additional 293,943 shares, above his earlier 84.65% stake paying up to around $21.00.
The next two largest shareholders (Mittleman Brothers and Alberta Investment) have now acquired a total of 791,931 additional shares, further reducing the float. Mittleman has made clear in public filings that he has no intention of selling for years.
Against that, the short interest in Revlon has gradually increased from 1.8 million shares to 2.7 million shares since April.
As a result, the total shares remaining in the tradable float is now down to 2.68 million shares but short interest is over 2.7 million shares.
Mittleman has stated in SEC filings that the fair value for Revlon could exceed $50. This is why Perelman is expected to buyout the remainder of Revlon.
For those who haven’t noticed, the squeeze has already entered its early stages in recent days.
This report is the opinion of the author. It is not a recommendation for anyone anywhere to do anything at any time. Do your own research, form your own opinions. The author is not an investment advisor. The author may conduct transactions on various securities mentioned in this report (or on securities of competitors of other comparable companies, securities etc.) within the next 72 hours. The author is long REV.