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Strategies & Market Trends : Roger's 1997 Short Picks
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To: Kam Naik who wrote (7237)11/20/1997 1:40:00 PM
From: cardiologist to be  Read Replies (1) of 9285
 
agree with you that insider selling makes the "buyout" theory less likely, but shorting the stock at 50 (if your time frame is 3mos) is risky for two reasons:
1. when the fda approves their stent, it is going to be rewarded with a minimum of 5-6 point bump up. while it is likely not going to hit 70 or 80, it will stay up while the euphoria over the approval is prevalent.
2. as is evident in other industries, (msft, banks), if you can't compete with them, you buy them. i have solid information that at least two suitors are lined up for avei, pending approval of their stent and settlement of the patent infringement lawsuit. this information comes from people who have bought at all the right times and predicted every run up in this company (especially the 9-10 point rise after the stent conference) that has allowed me to make a small fortune on this company.

the run up from 10 - 60 suggests profit taking amongst the insiders who are selling. they may not be willing to wait another year to gain the other 20 points for a number of reasons, one of which is the large negative potential due to shorts like yourself.

granted, this company is a great day trade if you have the resources to buy and sell 1000 shares or more. its intraday range is huge and has been profitable both ways for the last few weeks. it is in a trading range between 45-55 and is unlikely to go much further up till fda approval, and is unlikely to go below 45 because of the strong fundamentals in this technology and awesome future earnings.
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