Net stocks were slammed yesterday
(1/21), with the ISDEX Internet stock index down 6.14%. WWWFX was also
hit hard, with a 3% loss. WWWFX is expressing less volatility then the
major Net Indices, due to the fact that portfolio manager Ryan Jacob has
been holding (for several weeks now) a whopping 30% of the fund's assets
in cash, largely due to serious concerns of current Net sector
valuations. Does this signal a major correction for these high-flying
stocks in the near future? After all, Jacob has always been the most
bullish fund manager on Net stocks. Not long ago, he was fully invested
in Net equities at a time when all fund managers (even the other Internet
Sector fund managers) expressed great reluctance in holding such stocks
due to the stratospheric valuations.
Bluefly, however, managed to stay ahead of the pack yet again, continuing
a week-long trend of price divergence from the rest of the Net sector.
BFLY gained 2.46% on moderate volume, making it the 5th-best performer of
the top 25 stocks in the WWWFX portfolio.
George Mannes of TheStreet.com published
a story at the start of yesterday's session, raising the possibility that
WWWFX portfolio manager Ryan Jacob's addition of BFLY (and Jacob's positive
commentary regarding the company) was a driving force behind the "buying
frenzy" that drove BFLY "up 79% over three days," also observing "as long
as that commentary is amplified on Internet chat boards." He noted that
the WWWFX/BFLY news was quickly spread throughout all the Internet stock
forums.
Jacob did not know what effect the board posts may have had but conceded
"bulletin-board comments have been known to drive stock prices." An
Invesco equity analyst also said this was a possibility. A Bluefly
executive did not know the reason behind the runup and noted the company
does not comment on stock price movements.
It would be ironic if Mannes' article on message boards affecting the
stock reinforced this trend, as the article was published at 9:42 AM and
was, within a few minutes, reposted to all the major message boards. The
biggest price movement yesterday occurred between 9:30 and 11:45,
when the stock was pulled out of the day's low of $14.00 to the intraday
peak of 16 15/16 before settling down to 15 5/8 at close. |
