We’re going to take profits on Archaea Energy (LFG) today, after shares tripped our stop-loss of ‘under 20’ with a close at 19.80 Monday. We should book a profit of around 8%. There is more support for LFG below here, particularly at 18.70, but with sectors broadly breaking support levels yesterday, we prefer to get out with a profit now.
We don’t have a stop-loss on Energy Vault (NRGV), a half-sized position. Shares fell almost 23% Monday, with the downward catalyst being the filing of a prospectus to sell up to 116 million shares. However, the filing isn’t unusual: Since Energy Vault went public by SPAC, it is common for such companies to issue a prospectus covering the potential sale of every share committed prior to the closing of the merger – to those who participated in the bridge financing needed to go public, for warrants that are now exercisable and for the founders who get shares at a discounted rate once the merger is complete. While it’s never a good sign to see shares fall so much, the situation isn’t as dire as it seems – those shares won’t all be sold, though surely some will, and that will weigh on near-term sentiment.
The portfolio continues to hold NRGV. If the volatility is concerning to you, it is better to cut losses now and seek to reenter NRGV later when market conditions calm down.
Our regular update will come tomorrow. In the meantime, I welcome your questions and comments at brendan@cabot.net