Weekly Newsletter   Challenge account


Picks 09/14 – 09/18

New stock picks this week:

none

Existing & new holdings:

Symbol Qty Last Gain($) Gain(%)
FUQI 3 28.34 -1.98 -2.28
MED 6 20.45 12.67 11.52
V 7 73.79 66.78 14.85

Contribution this week: $0

Current capital exposure (total risk of the entire portfolio): -1.74%

New positions available to open: 1

Starting account value = $1,691.45

Account value = $1,668.12 (without margin)

Buying power = $943.87

[tag]Portfolio Gain/loss[/tag] this week = -1.38%

[tag]Portfolio[/tag] Gain/Loss for SEPTEMBER 2009 = 0.79%

Portfolio Gain/loss for 2009 = -24.51%

[tag]Annual Return[/tag] (CAGR): -33.54%


I was searching through the net to find why STEC has been so brutalized and turned my 18% gain into a small loss (thanks to my trailing stop loss) within a day. What I found shocked me and I still can not believe that someone can react and panic the way we could see in this stock.

What happened? A competitor, Pliant Technology, announced it would (I am stressing the word “would”) enter the enterprise solid-state drive market with its enterprise flash drive. If I understand English well, “would” doesn’t necessarily mean “will” and even if it really will enter the market as announced I would wait how it would affect STEC.

It seems investors had different opinion and were not reacting to what the company will do and how well or bad it will do after the new competitor shows up. They just simply dumped a fundamentally good stock in a volume I haven’t experienced since my first trading day. The volume was 7 times larger than normal. The following day (today) the stock continued falling. In the very first moment of trading this stock it was obvious that it was missing any support from institutional buyers. Maybe they are still waiting to start buying.

Analysts (well I know about one analyst so far, Betsy Van Hess) decreased target price for this stock even though they admit this announcement won’t affect STEC fundamentally and they see a growth potential in at least upcoming quarter (Aaron C. Rakers). There may be some pressure on the stock’s price during the next week which may lower the price even more, however, I am keeping the stock in my watch list and buy it back for cheaper price at its reversal.

The Street Insider brings the whole story about this stock


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