Sector,
We might get a push tomorrow from the same hedge fund that touted the stock this morning.
Two years ago, David Faber talked on Squawk Box about the practice of some hedge fund managers of juicing small float stocks at the end of the year to increase the gain shown on their books. Apparently hedge fund managers get a percentage of the calendar increase and can pad their annual incomes by some deft "manipulation" of a small float stock in which they already own a large position.(As David pointed out, this is technically illegal but difficult to prove and, of course, he personally didn't know anyone who did this -- said with a big grin.) At the time my largest holding was THQI (still is) and the largest share holder was the now defunct hedge fund owned by Mr. Maria Bartiromo (AKA Jonathan Steinberg). Now I'm not making any allegations <g> but surprise, surprise, THQI shot up the last two trading days of the year and then promptly sold off the first few days of the new year.
Speaking of stocks shooting up, I've been meaning to share with the thread about an article in IBD on Dec. 21 in the Computers & Technology section. It shows how much a change in the perception of a company can change its valuation.
First a little history. (Us southerners can't say anything succinctly.) I used to marvel at the run up in ITWO and made a mental note to buy it if it ever pulled back on temporary bad news or a general market pull back. The opportunity arose and I bought it cheap, traded in and out and eventually left it when it was selling for more than twice its projected growth rate. I noticed in recent months that it began to climb steadily and would check from time to time to see if the analysts had dramatically raised their estimates, which they hadn't. Recently, I noticed it going across the screen in the 150's and again wondered what was going on.
The article in IBD titled "Intelligent E-Business Push Proved to be Smart For I2" explained what was happening. Apparently last April the top execs in I2 called in their top managers and told them that they were going to completely reposition the company. The decision was to change the company from a relatively humdrum maker of supply chain management software to a provider of intelligent E-business solutions. They were hitching I2's star the to the internet. They had realized that their software was almost ready made for handling B to B commerce on the internet. To quote the article:....Oddly enough, I2's main line of products is not dramatically different from a year ago. I2 added some Internet functions, but its core offering remains relatively unchanged.
What did change were predictions about the Internet. Though online retailing was the rage, experts now believe commerce between businesses will dominate cyberspace....
As it turns out, that's something supply chain management software does well. One of its main tasks is to automate the flow of goods between businesses....For I2, the shift is akin to discovering that your aging right tackle can kick 65-yard field goals.
What is of particular relevance to MRVC is the effort they put into changing the Street's perception of the company. They had a $10 million media campaign aimed at Wall Street analysts. In addition they put on a road show and retrained all their sales and consulting staff to pitch the E-business strategy. At the annual software conference in Las Vegas, they brought in people ranging from Steve Balmer to Lance Armstrong to pitch I2's role in E-commerce. They have succeeded in getting the analyst community to no longer value them like a traditional software company but rather to compare them to companies like Broadvision and Inktomi. The stock has moved from a $20-40 trading range where I took my eye off them to the $190 + range.
A really concentrated PR effort can work wonders for a stock's price!
Thought you guys might find this interesting.
Cheers,
Bob |
