THOUGHTS FROM A SHORT:
Let me begin by saying that I covered all of my short position
(3500 shares of IOM) today. Some of you may remember, when IOM
was at 17 1/4 about 2-3 weeks ago, I had posted a very short
message on the board saying that IOM had reached a high and would
go down from there. I said this without giving any explanation
or analysis, and a couple of you guys got mad at me for that
(perhaps justifiably) and I apologize for that, even though this
is a free forum and I can say what I want. In hindsight, I have
been proven right over the last 2 weeks.
The reason I posted that was based purely on technical analysis,
not on any fundamentals. I don't mind telling you all about
it now. I began shorting IOM around $25 in late November. Again,
this was based mostly on TA, since the market was reaching new
highs, and IOM was not responding, and with all the negative
publicity about IOM (and several other midcap stocks), the
advance-decline momentum looked very favorable for shorting IOM.
Also there was news about insider selling coming out back then.
I shorted in 4 separate blocks of 1000, 1000, 500 and 1000
again at different prices, all the way through February.
The reason for my change of heart is that I believe IOM has
reached a low plateau. It will be hard for the stock to break
support at 15, worst case scenario looks like the stock MAY
go to $12. That is the absolute worst case. I donot see any more
money in this one as a short. From a fundamental point of
view, ironically, Syquest's announcement was the last straw
for me, because it told me that SYQT has basically conceded
the low end (Zip) market to IOM, and is going to announce
a secondary offering soon, which is why they had to bolster
their stock price (all this is reading between the lines,
I could be wrong) by hyping up Rocket. I think IOM has a
fantastic product, and is poised (not yet there) to become
the next floppy standard once volume shipments of the OEM Zip
drives commence. Something I saw in this month's Computer
Shopper told me that (I will not say what it was, let the smart
ones find out) volume shipments are about to commence (April-
May timeframe).
In conclusion, I think IOM may have gotten ahead of itself in
the past, and so may have presented a golden opportunity to
shorters, but at this point, it looks like a solid investment.
I donot want to become greedy on this one. I will be looking
for any temporary weakness in IOM as a opportunity to BUY.
Regards,
Kunal |
