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UWMC Ready to Pop

UWMC Ready to Pop

Reposted from UWMC’s board

I know what you’re thinking. Oh FFS, why are you talking about this boring mortgage company again Yes it’s tanked HARD lately. But tonight, news broke that just got REALLY interesting.

Background

UWMC has been trading sideways for months. Small float, boring company, shorts keeping it down. So the CEO made a change. He decided to sell 50 million of his shares to institutions, and in addition, agreed to an additional, large $100M sale of his shares, back to the company, using the authorized share buyback.

This was done to increase the float to over 10%, good for institutional buying and a possible S&P 500 inclusion.

Shareholders were NOT happy, thinking he used the buyback to enrich himself.

https://investors.uwm.com/news-and-events/news/news-details/2021/UWM-Announces-Launch-of-Secondary-Offering-and-Concurrent-Stock-Repurchase/default.aspx

Well the institutions ate it up. They got greedy, as they are known to do. They shorted the hell out of it. Share price went down 10% yesterday. Down another 7.2% today. The institutions wanted a HUGE discount on the offering, counting on covering later WITH THE SHARES FROM THE OFFERING.

https://preview.redd.it/xbklf972qh081.png?width=2384&format=png&auto=webp&s=356146b61796fa624072e2b568e73199f8966ecd

https://fintel.io/ss/us/uwmc

That's right, 10.5M shares shorted in just two days, TEN TIMES the usual volume. That's 10% of the float shorted in the LAST TWO DAYS!

This is on top of the 10% short interest as of the end of October:

https://www.ortex.com/symbol/NYSE/UWMC/short_interest

I know what you’re thinking, “no it’s not a squeeze, why does everyone think everything is a squeeze?”

If you've read this far, you may not be too dumb, so just hear me out.

The Twist

Tonight, something VERY interesting happened. After market close, the CEO said “the hell with this, I’m not selling hundreds of millions of dollars to institutions at this pathetic price."

Instead, HE'S ACCELERATING the $300M previously authorized share buyback:

https://investors.uwm.com/news-and-events/news/news-details/2021/UWM-Holdings-Corporation-Announces-Intent-to-Accelerate-Buyback-in-Public-Market-in-Lieu-of-Previously-Announced-Secondary-Offering-and-Concurrent-Stock-Repurchase/default.aspx

HE PULLED THE RUG OUT FROM UNDER THEM!!! Instead of selling millions of shares, HE'S BUYING THEM BACK!

How much?

UWMC has about $279M left on their buyback:

"Through September 30, 2021, total Class A shares repurchased by the Company of 2,742,617 for $21.0 million for an average price per share of $7.66"

https://investors.uwm.com/news-and-events/news/news-details/2021/UWM-Holdings-Corporation-Announces-Third-Quarter-2021-Results/default.aspx

At the after hours close of $6 per share, $279M is enough to buy back 46.5M shares, about 48% of the public float.

Considering 27% is held by institutions, there is only about 25% of the float left.

https://www.nasdaq.com [REMOVE] /market-activity/stocks/uwmc/institutional-holdings

This sets up a legitimate squeeze. The stock is already up 8.7% after hours. But it's not too late.

The Play

Shares, shares, shares. Buy premarket, or at the open. AND DON'T SELL.

Feeling lucky? Get short-dated calls near the money. Weeklies now available.

THIS COULD LAST WEEKS. UWMC is limited as to how much they can buy back on any given day (25% of the average daily volume).

Don't sell tomorrow. If you have to take profits, sell covered calls at your exit point.

Not financial advice.

Positions

46,800 shares at $6.94

40,000 warrants at $0.98

TL;DR

UWMC has a small float that's about to get tiny. Mat just whipped it out, lubed it up and placed it on the table. LFG!!!

submitted by /u/adlep2002
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