no wonder the stock hasn't dropped very much since the middle of Feb. Everyone saw the same thing, Traffic congestion! . CDWC had a great 3rd quarter, but a lousy 4th quarter. Lousy in term of a quarter when everyone was doing great from NSIT, MWHS to PCCC, yet CDWC only made marginal improvement from 3rd quarter. Although Price/sale ratio on CDWC had been relatively high in comparison with its peers, there is a reason to it - CDWC always maintained a very low selling and administration expense, 6.5% compared against peers' 8.6%. So, CDWC's Profit from Operation is 6.1% vs. peers' 3.44%. It leaves CDWC lots of flexible muscle. To discover why they have such a low S&A and whether they can maintain it is the crucial factor to the shorters'success, IMHO.
Disclaimer- I am a shorter, but just discover this reason as a reason not to short too DEEP. My highest short was $120. |
