for those without soundcards, it is Mr.Burns of the Simpsons saying "excellent." Just felt with all the speculation going on about what might be happening, that a little humor was in order.
I, along with everyone else, have no idea what is going on. To me, the volume and tape action don't look like a simple buy rec, especially from a small firm like Gaines Berland. Too many blocks crossing...to my knowledge, Gaines Berland is a retail firm.
FWIW, this could be VARL's "coming of age party." Back in the days when I was an analyst, I discovered a stock called Anaren Microwave. Their business is slightly different than VARL's, but their characteristics are very simular, i.e. very thin float, former defense contractor/turned electronics component mfr with a unique patented product.
I put a strong buy on Anaren back in the fall of 1995, when the stock was around 5 bucks. I was convinced it was a $30 stock in two years. It ran up to 8 briefly, then fell back down and languished for a year and a half. I mean, it languished. The fundamentals were all in place, but no one was paying attention. It just traded in a range of $ 6- $ 9 (simular to VARL's listing from 8 to 11) with very little volume. Suddenly, one day the tape action picked up. Within a week, it went from 7 to 12, on no news. A month later, it was at 19. Another month later, it was at $35. I mean, they hit their earnings and everything, but there was no real catalyst that fueled the run from 7 to 35--it was simply a few portfolio managers who found the stock on their radar screen, liked the fundamentals and started buying. The action in the stock was nothing more than their "coming of age" party. Once there was momentum, everything else fell into place. Perhaps this is VARL's coming of age party as well.
Now, I'm not saying this thing's going to 35 like Anaren did, my point is that since VARL has such a thin float (like ANEN did), it wouldn't take more than a few portfolio managers' buying to drive some life into the stock. So if in a couple of weeks there is no buyout announcement, don't get depressed...you obviously bought the stock because you felt there was a lot of potential...well, maybe there are some PMs out there who came to the same conclusion you did and they're out there placing their bets. Just food for thought.
One more point of interest: in a recent conference call, the CEO did say that they have entertained buyout offers in the past, and that if the right price/deal came along, they would take it. He went on to say that it was their opinion that the market was not valuing VARL properly and if someone came along and ante'd up for the company, a deal could be struck.
My 2 cents. Hey, whatever the reason behind the sharp run-up may be, remember this: enjoy the ride...if you've been in the stock for awhile, this is the kind of action you've been waiting for, so don't drive yourself berserk trying to figure out why...just enjoy it.
Gary |
