Actually, BFLY is part of a theme of shorts,
I currently have 35 short positions. My most successful tend to be companies who do some internet press releases and have stock prices that explode to the upside as short-term traders start driving them up. Then we see a sharp decline in price, followed by the long, slow "death march" back to levels close to where they started.
Fundamentally, these companies tend to have little or no sales, limited financial resources, and often, a change from an earlier business. They often do a lot of press releases that mention successful internet companies either by comparison, or announcing "deals", that are often just paid advertising.
Essentially, it is "Internet Gold Rush" for these companies who are just trying to get in on the mania. There are more and more of these companies going public, and so the supply of internet stock keeps climbing. The mainstream analysts will cover the big names (for the trading volume bonuses) or the IPOs (for the investment banking bonuses), but have no incentive to pick up the micro-cap restarts. These companies usually must fund themselves with very dilutive methods to keep alive, which further depresses the stock price. Ultimately, their odds of going to zero are very high. But, often, the insiders will sell when the price is being run-up and will do well.
Nothing against you Richard, but BFLY fits this pattern pretty well. My other shorts include:
SEVL, BIDN, IMOT, MLRE, CTRN, IMAL, IMON, MTEX, SKYM, TCTV, TMSR, WCTI
Look through their charts and news and see if you can't find some similarities.
Good luck in all your investing,
Archer |
