₪ David Pescod's Late Edition May 15, 2006
CRYSTALLEX INTL. (T-KRY) $4.52 -0.53
Last time we checked those roads that head north, they head
south as well, but to many investors/speculators those roads
might as well only go one way and that’s north! We are referring
to the average market player who will only buy a stock and never
consider the other side of the game—short selling.
To us, these streets definitely go north and south as well and
the chart on Crystallex probably gives you a unique look at the
opportunities provided here recently.
First about short sellers. Yes, they get a “bad-reputation” because
some of them get carried away and start bashing some
stocks, which isn’t something a person should be doing, and of
course anything said negatively about a company upsets all the
investors in the company and probably management also. Why
would management get upset? Well, no one likes to hear bad
things said about a company they are in charge of, particularly
when stock options are involved, right?
Crystallex is one company that we have followed from time to
time for shorting opportunities and we were given an enormous
opportunity recently when Jim Cramer, the infamous fellow of
Mad Money on CNBC in the States, started dwelling on this stock
and there is a small cottage-industry that follows Cramer for just
that opportunity lately (at least if some of the bull-boards are to
be believed) as Cramer tends to grab onto a story like a “pit-bull”
and gives it lots of attention.
Many give him credit for single-handedly moving Crystallex
(almost doubling the value) as he talked about it for quite a period
of time. Then of course, he was on to other things and Crystallex
since then has seen it’s stock significantly drop!
The crowds that follow Cramer watch as he hypes the stock,
then tries to figure out when it has topped and moves on when
he is bored—a short position could do well as that stock goes
back to where it should be, deserves to be, or might be at a future
time.
Crystallex is involved with the Las Cristinas deposit and it’s a
big one! Almost 13 million ounces and there are very few people
who dispute it, although Placer Dome didn’t want to hang on to it
and they got rid of it and as we say Crystallex seems to have well
thought of management and for certain we know a few Directors
that we have to figure are okay types, so what’s wrong?
Well, it’s in Venezuela and once again Chavez is going after
the oil and gas companies (late last week) trying to grab ever
more interest for themselves at no cost to the government.
We just keep thinking that if he is going to treat the oil & gas
industry that way, why would he treat the mining industry any
better and that’s why we would rather be short Crystallex on
certain opportunities then long ...
However, because of what Cramer did there is something
short sellers have to be aware of ... you have to make sure
that you can borrow the stock before you can short it. And,
with all the stock excitement raised by Cramer, a lot of stocks
have fled south of the border and all of sudden for those of us
who wanted to short—suddenly finding the paper to borrow to
short the stock has become a problem!
(This is a problem for those who buy stock never face.)
GOLD $682.10 -28.40
COPPER $3.6237 -0.2118
SILVER $13.16 -1.22
S&P/TSX VENTURE INDEX 3029.49 -196.37
We’ve commented (some people tells us too frequently) about the
fact that commodity prices and the venture exchange have gone
almost straight up….without a break. We all know that corrections
happen and we were long over-due for one!
We’ve mentioned it several times frankly, because we’ve raised a
bunch of cash and are looking forward to some corrections that we
can take advantage of, but who would have thought that we would
have a whole correction in one day.
Today, commodity prices stumbled as gold drops $28.40, oil
drops $2.63 and takes the venture exchange down for one of its biggest
one-day drops ever.
No, we are not yet near a support level, but some of that cash is
burning a hole in our pocket given some better prices today. We
nibble on some Leader Energy, as we figure this is just a small correction
in oil prices and the drillers are coming up with unbelievable
earnings and Wolfden Resources, because when it splits the company
into two we figure that the two halves are worth more than the current
company. And with “lottery ticket” money, we stink bid TG
World Energy.
Today is one of the biggest drops ever on the Venture Exchange!
Is 2600 the support level?
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