Speculators Flushing Out?
Tom,
It does seem strange that the stock slips down a point
or two on good news, doesn't it? If you watch the
intraday charts, with volume, for IOMG, available from
lombard.com
once you register, for free, online with Lombard, and
compiled for past dates by Guy Gordon--thanks, dude--at
white-crane.com
you'll see two things that are relevant. One is that,
in ways that weren't there until recently, there are
some very large blocks being traded, up to 50k and
the like. Another is that, just about every day,
there's a bit of a rush in the last hour or thereabouts,
either up or down. This indicates to me that big
institutional investors are flushing the stock just
now. They bought a week ago for 35, and now they're
waiting for the right moment to cash back out again.
Some of the big sales look like they're triggered by
intraday trends up or down, and the sales at the end
of the day look like people making moves so they can
close the books on this $35 stock and move on.
I don't know if that's it or not, but surely some of
the weakness in the stock of late consists of big
buyers of the $35 secondary cashing in quick with
a 10-20% profit. In chunks of 10k blocks, there
are 500 such moves possible in the 5mm secondary
sale. Once the big investors have sold their big
blocks for a quick profit, of course, then they
no longer hold IOMG and they can't do it again.
If they sell to long-termers, then the process
will slow once such short-term profiteers are
done. I think the number of long-termers is
pretty high, and it'll rise once the Q2 figures
come out and the pervasiveness of the Zip in
PCs becomes clearer and clearer.
That's one speculation, at least. Does anyone else
have greater expertise than I on such things? How
about Mary C.? Don't you watch those intraday
charts closely, Mary?
In any event, I don't worry too much about the
short-term movement. It's a little unstable at
the moment, but in the long run, the stock will
rise or fall not on rumor, but on the hard, cold
facts in the quarterly and annual reports. The
tea leaves that are REALLY worth watching will
be available in mid-July. If informed shorters
like Joe Rizzo are right, then at the very worst,
the stock is going to level off roughly where it
is now. It's clearly got too good a product and
too good revenues to tank down to $10 or something
like that. Thus, if you bought in at about today's
price, you won't lose much in any event. If, on
the other hand, the "paradigm-shift" school is
right and the Zip ends up in every PC, then the
stock is going to rise to at least somewhere
between $50 and $100, maybe more if the AcerBasic
idea catches on with, say, 500 million people who
would not otherwise have bought a PC, or some other
very nice expansion occurs. The only way you can
lose big is if you're very short on the stock or
if you panic and sell if it drops briefly down
to, say $30 (which I don't think it will do).
That's my two cents on the matter, at least.
It's not going to take a Dorfmanesque dive
into the penny stocks.
Cheers, Tom |
