That run of Micron was a thing to behold. I had been shorting the stock in the mid forties and making a few bucks but the thing refused to fold notwithstanding a raft of bad news, so I covered. Then, if I recall, memory prices popped maybe $.50 and all the maniacs that follow that stock went wild. You have to remember that it's hard to let go of a good thing. All the people who made fortunes on that huge run to 90 wanted to have it happen again -- it was probably one of the best things in their lives. Anyway, I figured I'd join the crowd in a cowardly kind of way and bought Oct 60 calls. That crazy stock started jumping points at a time and I feathered out in the 56 - 58 range, just out of luck. Anyway, back to Gateway, a lot of people have made a lot of money in this stock and it's hard to let go. One of the best stock market books of all time - Reminiscences of a Stock Operator - says something like "it's amazing how much stock you can sell on the way down". It's true. Even if a story has completely changed, people hang on their memories and think it's cheap if it has sold off. That factor is exacerbated these days with the funds trying to run the shorts - have you looked at the short interest in GTW lately.
I spoke to a famous short seller recently whose a friend and asked him if he thought GTW had financial problems given their case is quickly evaporating from their balance sheet. He said he thought they had business problems more than financial problems with everyone coming after them. Actually, I think Micron has great management. Can you imagine these guys still being profitable, maybe, with ram prices coming down the way they did. If they ever turn, the stock will turn too and might even have another grand run. GTW, on the other hand, has a mess on it's hands. If, as posters on this board suggest, they can't manufacture as well as Dell and GTW, I think they're dead. Who needs them? And, I hated that press release. So far as I can tell after reading the Q the only reason they had a so called operating profit was because of the tax credit on the writedown. |
