I've seen lots of stocks tank after reporting what appeared to be solid earnings, Bruce and I and another guy we know used to joke that it would pay to short every company just before earnings because even the ones that beat seemed to barely go up or else go down and the ones that missed or didn't say just the right thing....look out below...and that was in a bull market. No one really cares what a company reports on the headline, the thing that matters is what is down below in the tables and comments and what is said on the conference call.
I don't remember the specifics of the report you cite but I remember the bears pointed to things in the report which they based their short positions on, one was the insider selling which was explained on the conference call but how many investors/traders, especially longs, listen to the conference call? There were other concerns and clearly by the next day there were more sellers than buyers, I don't see this as an orchestrated effort by the shorts, simply supply and demand, the longs were already long the stock, when a few started selling the stock dropped and more sold and it dropped more, etc.
I do question the sell rating issued with the 12 dollar price target because of its timing. I do believe that the shorts have mouthpieces they use for their agenda and they often put out misinformation or at least put out their opinions in inflammatory ways to get the most attention possible.
In any event, as I said, the outcome speaks for itself...if the shorts were wrong the stock would be at 30 now and they would have gotten stopped out or they would be broke. The signs were there to be seen and found, some people found them and profited, others turned a blind eye and got hurt for it.
I don't agree that those that got burned did their homework, if doing your homework means reading the company's own press releases and the anal-ysts' estimates and taking them at face value then yes they did their homework, however I think that is tantamount to buying a car because you heard some guy on Oprah say it's the best one you can get right after you saw a commercial from the same company telling you how great their car is. Two strong buys, I better get me one of those. That isn't research, that's hoping someone else did the work for you and got the right answer.
carl |
