One person's opinion. I've traded THQI a few times over the last year (long and short) and made money in both directions. Currently I have no position in THQI. I made a significant mistake in not selling THQI at the end of the year when it reached it's high on low volume and held to long, still making a few bucks, but not as much as I should have.
IHMO what you're seeing here is a combination of factors....(1) THQI is a small cap and subject to a lot of day trader action. When you see an active market like today with a lot of (presumably) day trading activity on stocks like DELL and INTC...etc. the volume on THQI will be low and usually move down, as it did today. (2) The "season" for game stocks ends at Xmas. You'll notice that generally all the game stocks like THQI are down substantially after XMAS. (3) Post XMAS these stocks traditionally trade down approximately through the end of March. (4) Given (1) and (3) you might expect an unusually high amount of shorting and it was. (5) While the quarter's earnings and growth were fabulous by every measure, I believe that the post Xmas sell off and shorting on a small cap overwhelmed the earnings and revenue growth. I was amazed, as I'm sure you were, at the strength of the sell-off despite the earnings. If I held a long position at the moment I would continue to hold.
I'm not predicting anything in particular for the next 3 weeks...but my plan is to take a long position in THQI after March and hold it till the end of the year and then sell. If there are significant pre-earnings runs I may close my position the day of earnings expecting a sell off post earnings and take a long position a few days later. After the first of the year I'll seriously consider a short position. Sometime before the end of the year I'm expecting THQI to hit 50+; earnings for the year at 2.75-3.00. A very optimistic price for THQI by the end of the year is 60 (3.00 earnings at a 20 P/E).
Mergers, acquisitions, the transition of wrestling titles and other wild cards make everything subject to change.
I'm not suggesting that anyone take this as trading advice but this is my view of the events past, present and future. Long term holding certainly has strong merits, but you have to be able to ignore the roller coaster...
Best Regards,
Jim |
