Naked Brand Group Ltd (NASDAQ: NAKD) is screaming for the top in the premarket hours this morning, but there have been no press releases issued. So, what’s the deal? In an SEC filing the apparel and swimwear company disclosed the ownership of a large stake by an institutional player. Here’s what’s happening:
Ault Global Holdings Owns 6.4% of NAKD Shares
In an SEC Filing, Naked Brand Group disclosed ownership of the company’s shares by Ault Global Holdings Inc.
In fact, according to the filing, the institutional investor owns more than 41.1 million shares, working out to be about 6.4% of the outstanding share count.
As a result of the disclosure, the stock is one of the most active trading stocks in the premarket, with more than 4 million shares traded so far.
Why Investors Care
There are two major factors at play here:
- Naked Brand Group Is A Meme Stock. Meme stocks were made hot when the Wall Street Bets Reddit group made several stocks run for the top in concerted short squeezes. With the company being caught up in this activity, it has gained quite a bit of attention from the investing community so far this year. So, any meaningful announcement coming out of a meme stock like Naked Brand Group is going to create excitement, and while this wasn’t a press release announcement, the filing brought the ticker back to the top of the tape, giving retail investors yet another reason to consider jumping in.
- Smart Money Follows Big Money. Oftentimes, retail investors will follow the moves made by institutional investors. After all, institutions have resources at their fingertips that the average investor could only dream of having. So, by following the institutions as they make money in the market, it only makes sense that the retail guys have an opportunity to mirror their returns, making successful investments in the process. With such a large stake taken by an institutional investor, it only makes sense that retail investors are eager to get involved.
Is There Potential For Another Short Squeeze?
That’s a big question, and in my view, the answer is a resounding “Yes.”
At the moment, the short interest sits at about 8.65%, which isn’t as high as I’d like to see when looking for a short squeeze, but is plenty to make one happen. At the same time, retail investors already got together behind the stock in the past and saw the monumental movement they were able to cause. So, investors looking for another opportunity to play what they know are looking for that opportunity with Naked Brand Group.
At the same time, the timing here seems perfect. Ever since being caught up in the meme stock run, Naked Brand Group stock has been experiencing a bit of a downtrend, one that many believe has brought it down to being severely undervalued. So, a rebound in this stock could quickly become a very compelling play.
The Bottom Line
The bottom line here is simple. Naked Brand Group stock became famous among retail inventors when it took the meme related run for the top. Since then, things have quieted down, creating a perfect opportunity for a second run. With a large institutional player jumping in, we may have the catalyst for that run hitting the tape as we speak, making NAKD stock one to watch closely.