🐳 🌋 BlackRock-Ageddon: The Way That You Use It 🎶
BlackRock-Ageddon 2: The Way That You Use It 🌋
Help from my man G with research assist from /u/sublette313
NOTE: REGARDLESS OF REASON HOW ABOUT THEM PLUG PUTS
It’s in the way that you use it
It comes and it goes
It’s in the way that you use it
Boy don’t you know?
No, I don’t know, Eric. But, with the help of a WHOLE lot of you, G and I think we know the most logical way(s) to use the information gleaned from BlackRock-Ageddon 1. For the uninitiated, please check out BlackRock-Ageddon in Yeet no. 1
Refresher: BlackRock ETFs ICLN/INRG track the SPDJI Clean Energy ETF, an index that has a high concentration in only 30 holdings. After consultations, they have decided it’s time to expand, so that the performance of a small number of companies don’t overly influence the entire index. On 4/19, the changes will take effect, and on 4/2 they produced an internal document of pro-formas. As a tracker of this index, BlackRock ETFs ICLN/INRG will need to purchase and sell significant portions of their holdings.
When calling the SPDJI on Friday for the pro-forma files, I was stonewalled. There was a workaround found by our newest Research Associate, the incredible /u/sublette313, that allowed us to get crucial info, but we’ll get to that in a moment. First I want to give our further thinking and highlight reader feedback, and present what’s logical by process of elimination. These are our wrenches:
Dark Pools and Blocks: lots of the necessary movement will happen through dark pools and block sells, making this less of an “oh shit, we’re going to watch all this dump live!” scenario, and more a shady slow-burn of shifting. There is still many-a-play, but it will be more subtle than some kind of Y2K.
The lack of pro-forma files released publicly means that what we have is a very, very strong hunch on what will be added to the index. But we got a research assist (below).
The most profitable way to play this in our estimation is shares or calls in the tickers to be added with the smallest market caps. These, logically, would be the biggest movers as they would be greatly influenced not only by the required institutional purchasing happening in clandestine ways, but also a) the news cycle and wider release of information and b) the literal, additional purchase benefits of being an added ticker to the index.
In the first DD we provided a document from SPDJI called a “consultation”, which really means “updated blueprint”. /u/sublette313 really dug into this, and here’s what he found. Inside the “consultation’ and boy was it a jackpot if you had the patience to keep looking.
The “Eligible Universe Summary (Oct 20)” tab of the spreadsheet gives us a list of 74 potential adds identified by SPDJI. Okay, AND… The “Current Consultation” gives us a list of 68 tickers identified by SPDJI this month. I’ll wait a moment for you to click the ‘current consultation’ tab, in red. Find what I’ve labeled here as….`YES’.
Now, I’m not necessarily saying this is an exact list of many of the current companies THAT ALSO INCLUDES A BUNCH OF NEW COMPANIES to be added with the proposed weighting. What I AM saying is that this is a selection of energy companies…chosen by SPDJI…with a ‘hypothetical’ list of energy stocks that have had new weighting applied…in a tab called current consultation…that are filtered from a tab THEY’VE labeled “hypothetical universe”.
There’s also a cool column here to the right that G pointed out. It can help you screen by showing what percentage of the stock would be at owned 5, 10, or 15 billion ownership stake. This tells what companies (small) can be most affected by coming purchasing— ‘the good shit’
We’ve sorted through, and this is the list that sticks out to us. We did not just throw a dart–these choices reflect some combination of UOA, RAMBO, charting, fundament—AW WHO AM I KIDDING. HELL, WE LIKE THE STOCK!:
For calls we like:
The low-cap (~5b and under) tickers listed in the ‘Current Consultation’: FCEL, SPWR, CWEN, TPIC
A grade in “current consultation”: PCG
B grade in “current consultation”: FCEL, SPWR, JKS
Honorable mention that didn’t make it in the consultation: BE
Notably not included in the consultation: BLNK, VST
VERY BULLISH NEE REGARDLESS
We are also bearish on PLUG still with this development, but will need to update particulars pending more looks at purchase volume and flow PM Monday.
*Watch List *– option chain doesn’t offer any clues/illiquid, but everyone should be on the lookout for UOA: IDA, ENIA, ORA, HE, AVA, AY, ELP, DQ, ROCK, TPIC, GPRE
We will monitor UOA and open interest on these tickers starting Monday. What this DD showed is that it’s not what’s in the news, but it’s in the way that you use it.
TLDR: PCG FCEL, SPWR, CWEN, TPIC calls, PLUG puts but it’s probably gonna have a little dead kitten action after its dump since the first one of these DDs
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April 7, 2021 at 11:28AM