Boots & Coots Dn 21% After Rising 311% March 13-19
DOW JONES NEWSWIRES
By Tom Locke
Of DOW JONES NEWSWIRES
DENVER -- Shares of Boots & Coots International Well Control Inc. (WEL ) were down 31% in heavy afternoon trading Thursday.
Reports of only a few oil well fires in Iraq and a buy-on-the-rumor, sell-on-the-news reaction by investors to the war were given as reasons for the decline.
After hitting a 52-week high of $2.55 Wednesday, Boots & Coots shares showed high volatility and volume Thursday, hitting a high for the day of $2.50 and a low for the day of $1.05.
Michael Shonstrom, president of Shonstrom Research Associates in Denver, said that he believed that much of the buying is by investors covering their short positions on the stock. Boots & Coots announced on Feb. 18 that a lender, Checkpoint Business Inc., had presented to the company's board of directors a proposal to restructure Boots & Coots. The proposal includes a voluntary Chapter 11 bankruptcy filing. Boots & Coots said the board was considering a Chapter 11 filing as well as other options.
"There's been so much trading in this stock, and there's been such a huge short position built up, it almost takes it to a different level," Shonstrom said. He believes much of the trading is being done by short-term traders trying to make a quick profit on a volatile stock. Shonstrom owns warrants in Boots & Coots, and his firm has no investment banking relationship with the company.
Boots & Coots shares have risen in part because of speculation of business it would get in stopping oil well fires set in Iraq. A unit of Halliburton Co. (HAL) has been awarded a government contract for overseeing well control related to the Iraq war, and Boots & Coots has strong ties to Halliburton, said Shonstrom.
The U.S. military has confirmed some oil well fires have been set in southern Iraq, according to White House spokesman Ari Fleischer.
Barry Gross, who handles investor relations for Boots & Coots, declined comment on the activity of the company's shares.
Boots & Coots shares were recently down 65 cents at $1.45 on volume of 124 million shares versus average daily volume of 10.4 million.
-By Tom Locke, Dow Jones Newswires; 303-293-9294; tom.locke@dowjones.com
Updated March 20, 2003 3:59 p.m. |
