Insider Buying

Insider Buying Report: Hyzon Motors Inc (HYZN:US)

The picture shown Grey and black hydrogen fuel-cell truck from Hyzon Motors with a blue and white foggy sky background.
Hyzon Motors Inc
(HYZN:US)
12 months:
N/A
Activity:
Bullish
Pattern:
Large purchase from CEO
News:
Targeted by short sellers
Hyzon Motors Inc
(HYZN:US)
12 months:
N/A
Activity:
Bullish
Pattern:
Large purchase from CEO
News:
Targeted by short sellers

Insider buying can provide investors with valuable trading signals. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to go up.

In this report, we are going to highlight a large insider purchase at Hyzon Motors Inc (HYZN:US). Hyzon is a hydrogen mobility company that came to the market in July 2021 through a SPAC deal. Headquartered in Rochester, NY, it is engaged in the development of zero-emission hydrogen fuel cell powered commercial vehicles, including heavy duty trucks, buses, and coaches. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $2.0 billion.

Hyzon Motors Inc: Insider Buying

Our data shows that on November 22, CEO and Co-Founder Craig Knight bought 166,000 HYZN shares at a price of $8.22 per share. This trade cost the insider $1.4 million and increased his holding to 343,200 shares.

The graph represents Hyzon Motors Inc' price history, with significant buy event highlighted.

High-Conviction Purchase

This trade caught our attention due to the fact that it has increased the size of Mr. Knight’s position significantly. With this purchase, he has increased the size of his holding by 107%. This signals that he is very confident the stock is set to move higher.

This trade is also noteworthy due to the fact that it represents the first buy from an insider at Hyzon since the company went public in July.

Short Selling Red Flags

Normally, when a top-level insider spends over a million on company stock, we see it as a bullish indicator. However, in this case, we think caution is warranted towards the stock. That’s because, looking at the short selling data on Hyzon, we see a number of red flags.

The first is that the number of shares on loan has increased significantly in recent months. Two months ago, 3.9 million HYZN shares were on loan. However, today, 9.7 million shares are on loan. That represents an increase of 133%.

Different short selling measures are depicted in this diagram, which gives shorting statistics.

The second is that utilization is very high at 97.3%. This indicates that demand for the stock from short sellers is elevated at present.

It’s worth noting that in late September, short seller Blue Orca published a scathing report on Hyzon Motors and stated that it was shorting the stock.

In its report, Blue Orca said it likened Hyzon to a “Chinese Lordstown Motors” (Lordstown was targeted by short sellers earlier in the year) and that the company is just a repackaging of a flailing Chinese parent company which has been trying to sell the same hydrogen fuel cells without much success for 17 years.

Blue Orca claims that:

  • Hyzon’s largest customers are fake. The short seller says Hyzon’s major customers are a fake-looking Chinese shell company incorporated three days before the deal announcement and a tiny New Zealand startup which said that it is not really a customer.
  • Orders are overstated. Blue Orca notes that in Hyzon’s initial investor presentation filed in February 2021, it claimed that big names such as Coca Cola, Ikea, and Heineken were already “top tier customers'' and “partners.” Yet after other EV SPACs like Lordstown Motors got into trouble for fabricating customer contracts, Hyzon quietly dropped these household names from its investor decks.
  • Financial projections are unrealistic, Blue Orca believes Hyzon's projected gross margin of 32% is "pure fantasy," as it's nearly twice the industry average and 10% higher than Tesla's gross margin.

In light of the short selling activity here, we think caution is warranted towards Hyzon Motors stock right now. The sharp increase in short interest suggests that a number of institutions see downside risk at present.

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