Conspiracy theories taking a step toward the surreal: letter writing advice. (The emboldened portions are particularly hilarious.)
Message 18017979
To whom it may concern,
Please look at the recent trading action in XXX, XXXX, and XXXX over the last few months. They were three stocks with very cheap PE's and strong earnings growth. Things looked great fundamentally. Then mysteriously, all three stocks started falling and eventually collapsed.
It's almost as if somebody knew something early on from someone, perhaps within the company! The circumstantial evidence is incredibly strong, as you will see.
As you know, major shorting groups don't guess, they do a lot of Due Diligence. If they find something seriously wrong they don't hesistate shorting stocks. But three stocks in the last few months were being seriously and suddenly targeted by one or more major shorting groups. The stocks started dropping, under very mysterious circumstances. The Yahoo message boards started coming alive with bashers shouting scary things in capital letters and lots of exclamation points.
All 3 companies were performing very well, with excellent performance and guidance and there was absolutely no hint that anything was wrong or going to go wrong. In fact, just the opposite as managment of these companies were reaffirming and/or increasing already strong guidance.
XXX had Investor Business Daily's highest rank of 99 for earnings growth and stability and had increased earnings every quarter for over 2 years. Yet it was mysteriously falling from $46 to $9. This was in spite of beating earnings expectations and posting a quarterly gain of $1.01 per share in its latest release! BTW -- the previous year it had fallen from $60 to $15 and then back to $46.
XXXX had beaten earnings by a whopping 10 cents, had a PE less than 1/4th of XXXX, a competitor, and yet started falling fast. Again, there was no clue why. Even the companies margins had doubled from a year earlier, indicating strong demand for their products.
XXXX had grown EPS by 76% Y-O-Y and yet it too started mysteriously tanking DRAMATICALLY, for no publicly disclosed reason. It certainly wasn't overvalued compared to its peers. In fact, it had a PE of 10, while others like XXXX, XXXX, and XXXX had PE's from 23-57!
So how did the "SHORTS" know something was wrong? Well, that's the point, they COULDN'T have known. At least not without illegally disclosed information.
In XXXX's case they COULDN'T have known in June 2002 that Turok: Evolution sales were going to be disappointing. After all, the program wasn't even scheduled for release until early September, 2002. But the stock started tanking dramatically in June anyway.
So why did the stock start tanking in June 2002 from $6.25 to $5, 4, 3 and even hitting $1.47 by August 2002?
The company had said nothing negative in months. In fact, just a few weeks ago they INCREASED earnings guidance. They said they expected +14 cents per share in the August 2002 quarter and +23-26 eps in the Nov 2002 quarter. Their liquidity position had increased nicely too.
Strange, isn't it? To short a stock with such voracity with nothing but good news and a PE of 6 (less than 1/4th of it's competitors). To short a stock so confidently even though EPS has grown 75% last year and was predicted to grow 60-75% in the current year.
ONE THING IS CLEAR ---- Major shorting groups simply do NOT "short" stocks with a PE of 6 and a forward PE of 3, unless they ARE sure something negative is about to happen.
XXXX and XXX followed the same pattern. Excellent earnings and company guidance, very low PE's and PEG's, and then a major short increase, for mysterious reasons. Then eventual horrible news that nobody except insiders could have known might occur with any certainty. In fact, MANAGEMENT's guidance was for very good news ahead!
So has an employee or two been leaking information to shorting Hedge Funds or institutions? Maybe an insider, engineer, or marketing individual?
Bottom line - I believe it's clear that Reg FD has almost certainly been compromised.
Just looking at XXXX's case, we seriously doubt major shorts would ever have risk so much money on a company that has grown EPS by 76% last year and had a forward PE of 3.4. No way they could have known that management's guidance of a profit of 14 cents eps would turn into a loss of 11-13 cents! And certainly not back in June when the tanking began without any bad news.
Please investigate this situation and notify us if you are in need of additional information.
Respectfully, |
