January 12th - NKE MRVC
Cramer started out comparing K-Swiss to Nike Inc. (NKE) and said Nike was the best of breed.
Closing Price: $99.76
After Hours High: $ 100.43
Percent Increase at High: 0.67%
After Hours Most Recent Price: $ 100.06
Percent Increase at Most Recent Price: 0.30%
Sector: Consumer Goods
Days to Cover: 3.4
Short %: 2.29 %
% Held by Insiders: 34.64 %
% Held by Institutions: 62.40 %
50 Day Moving Average: $96.73
200 Day Moving Average: $85.92
Average Price Drop for Sector: 4.8%
Well the after hour numbers speak for themselves as there was little increase after hours. Maybe people have already shut down for the long week, or maybe since this was more of an education segment there were few buyers to increase this one. Too expensive anyway.
Next Cramer had a speculative pick MRV Communications Inc. (MRVC)
Closing Price: $3.62
Percent Increase at High: 16.02%
After Hours High: $ 4.20
Percent Increase at Most Recent Price: 11.88%
After Hours Most Recent Price: $ 4.05
Sector: Technology
Days to Cover: 5.2
Short %: 6.45 %
% Held by Insiders: 3.78 %
% Held by Institutions: 44.50 %
50 Day Moving Average: $3.48
200 Day Moving Average: $3.09
Average Price Drop for Sector: 4.3%
A cheap stock with a big increase after hours. These ones can be wild rides as it seems some people don't see a difference paying $3.80 or $4.20 because no matter what it still looks cheap to people....even though they aren't really looking at why the stock is as cheap as it is. Its hard to say what may happen here, but if you look at BBI from today, which was downgraded, went down, but then went up the rest of the day (and as someone commented, I agree...I'm not sure I agree with the BBI downgrade either...if they are taking market share from netflix and consolidating stores aren't those good signs?? Unless they can't afford to rent videos via the mail?) Anyway, on Tuesday I would look for as quick of a short as possible, keeping in mind that only a little drop equals a decent percentage gain, but of course the opposite is true too...a little gain equals a decent size loss (on paper). I like to look at stocks with a similar price to see how they react and RAD is a recent example. Below is how it reacted the next day.
Regular Hours Open: $5.79
Initial Spike Price: $5.87
Time of Spike: 9:30am
Initial Drop in Price from Initial Spike: down $0.23 (-3.9%) to $5.64
Time of Initial Drop: 10:14am
This by no means the same will happen with MRVC, and MRVC went up even higher after hours then RAD did, but it shows that within the first minute of trading RAD had over a 1% move. If MRVC goes back up to and above $4.20 I would think it unlikely for the stock to hold 16% gains.
posted by CramerTracker @ 1/12/2007
6 comments
Comments on "January 12th - NKE MRVC"
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Anonymous said ... (January 13, 2007 9:45 AM) :
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CramerTracker said ... (January 13, 2007 10:08 AM) :
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Anonymous said ... (January 13, 2007 2:40 PM) :
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CramerTracker said ... (January 13, 2007 5:45 PM) :
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Anonymous said ... (January 13, 2007 11:56 PM) :
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Anonymous said ... (January 16, 2007 9:41 AM) :
post a commentShorted 1k @ 4.09 will average up if it goes into the mid teens again. Looking at the chart 4.10 to 4.20 looks like resistance to me. I wish it was a $36 stock that went to $40 instead of a sub $5 stock I agree with tracker that people look at the price and not the pecentage move sometimes.
Luckily I think the people who own the stock previously understand and see the large percentage move and have the presence of mind to see a good thing when they've got it and sell some shares (especially if they notice it was Cramer and realize they can buy back cheaper), which will normally create the drop. The other issue with a stock of this price is that some brokers don't allow short selling for stocks under $5. This may be significant because part of the reason the stocks do drop is because of the extra supply that is created by the short selling (borrowed shares basically add to the float), and is also the reason why typically the price shoots back up after the lows because as all the people shorting with this or a similar strategy are all buying why can cause a mini-squeeze.
Need advice. NWACQ just announced that it's common stock will be worthless after the bankruptcy settlement. It's currently down .71 to 4.83 with an ask of 4.87. Is this an opportunity or something to stay away from?
I notice its on the pinksheets...Personally I'm not sure you can short pinksheets since I have never tried, but I recall looking into it in the past and reading it may not always be possible. Maybe you have, but it might help to read the yahoo message board for the stock. There is one thread saying the only way that shareholders will get anything if a judge rules somehow to give some cash to them. I recall when Air Canada was coming out of bankruptcy, the told everyone that the stock would be basically worthless (13,000 shares of the old for 1 share of the company) and people still bought it all the way down to about 3 cents before it stopped trading. I too am a little unsure why the price hasn't gone down more, but it may be the same reason why some stocks don't always trade to the buyout price on a takeover....some people just don't listen or beleive it. I see you can buy put options too, which may be another way to play it if you can't short. I seems a little too easy though doesn't it... Maybe someone else has some input?
Jason, I have asked the other Aliens in the surrounding planets and this is what I have come up with. You can short any stock as long as you are willing to pay the appriate fee (see Schwab)
"Lenders of hard-to-borrow securities charge a fee in the form of interest. Clients who wish to short hard-to-borrow securities and are willing to pay a fee to cover the cost of borrowing those shares.
Delta dalrq.pk has been trading at 5 to 10 times the normal volume and doubled in price over the last week. This stock becomes worthless as they exit bankruptcy. Same volume increase on bankrupt Northwest nwacq.pk. Until it exits from bankruptcy it can still trade. People still trade on it, but it's mainly gambling, because of what you said (it being worthless when it comes out). Until then, it's basically a penny stock and for some reason, like mosquitoes to the bug zapper, investors seem to like to trade paper. Samething happened on UAL before they exited. What I dont know is what happens to short shares once the stock is canceled. The problem I see with puts is there may be a lack of liquidity when you sell to close your put possition. I'm looking into this more myself.
Averaged up in pm to 4.13 covered at 4.05.