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Short City: Washington Post, JetBlue, NJ Resources

Posted May 6th 2009 3:30PM by Joseph Lazzaro (RSS feed)
Filed under: Short Stories, JetBlue Airways (JBLU), Stocks to Sell

Every market is a two-sided market, and while the typical investor makes money during bullish phases, experienced investors know how to make money during bearish phases, as well. In fact, many experienced and institutional traders make more money shorting stocks than by going long.

Short these shares if you can tolerate high-risk and are an experienced investor that does not remove Buy / Stop Losses.

Washington Post Company (NYSE: WPO) The Post's education segment (Kaplan) has grown revenue nicely, but large-single digit (or worse) revenue declines in the flagship print metropolitan daily newspaper The Washington Post will continue to hurt results in F2009, and probably for longer. Buy / Stop Loss if you were to sell shares in this company: $460.

Continue reading Short City: Washington Post, JetBlue, NJ Resources

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When the S & P Index is hard to borrow, is the PPT in the house?

Posted Apr 23rd 2009 2:30PM by Alex Salkever (RSS feed)
Filed under: Major Movement, Rumors, Short Stories, S and P 500, Financial Crisis

The PPT is the vaunted Plunge Protection Team, a much derided but often alluded to collusion of the major prime brokerages (Goldman, Morgan, Stanley, Citi) to halt major stock market declines by manipulating the market. It's never been proven, of course. But a firestorm of comments on ZeroHedge and in other places where hardcore (and some institutional traders) gather has zeroed in on the difficulties many have had borrowing shares of the S&P Index (SPY) in order to short the index. The commenters believe this is a result of the PPT holding back shares to stop any shorts that could torpedo the ongoing rally.

Continue reading When the S & P Index is hard to borrow, is the PPT in the house?

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Short selling madness is sanctioned by the SEC

Posted Apr 7th 2009 3:00PM by Connie Madon (RSS feed)
Filed under: Bad News, Management, Short Stories, Market Matters

There was a strong outcry last year: "Stop the short selling. It's killing the market." Short sellers were blatantly selling short and then "failing to deliver the stock."

So what exactly was happening? First of all, in order to sell short (sell something you don't have) you must first borrow it from someone else. Usually there are willing lenders at large brokerage houses. What you are trying to do is to sell the stock first and replace it a lower price later on (that is if the market goes your way -- down).

Last year we saw traders selling short without first borrowing the stock. Then, when the buy trade to replace it was executed, there was no stock to deliver. Remember, they were supposed to borrow it first. This is called a "fail to deliver" trade. Former SEC commissioner Roel Campos wrote a letter and posted it on the SEC's website saying: "these companies are instead targets of illegal and manipulative trading with intentional failures to deliver used by traders to extract profits as the share price plummets."

Continue reading Short selling madness is sanctioned by the SEC

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Despite rally, there's a surge in short selling

Posted Mar 26th 2009 10:30AM by Connie Madon (RSS feed)
Filed under: General Electric (GE), Ford Motor (F), Short Stories, Market Matters, Citigroup Inc. (C), Bank of America (BAC), Amer Intl Group (AIG)

Short selling is on the rise on the New York Stock Exchange. It is at its highest level since the collapse of Lehman Brothers. As the S&P 500 rallied 3% from February 27 to March 13, short interest rose 4.2%, up from 3.8% at the end of February.

Short sellers are betting against the market. In a short sale, the investor first sells the stock in the hopes to buy it later at a lower price. First, the seller must borrow the stock from a willing lender. The heaviest short sales have been in Citigroup Inc (NYSE: C), Ford Motor Company (NYSE: F), General Electric Co. (NYSE: GE), American International Group Inc. (NYSE: AIG) and Bank of American Corp NYSE: BAC). Frankly, with AIG, Citigroup and Ford trading under $3.00 its hard to figure out why there is so much short selling in these companies unless the shorts are looking for a total collapse of these firms.

Continue reading Despite rally, there's a surge in short selling

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What's wrong with the SEC investigation of Lehman Brothers?

Posted Mar 23rd 2009 3:00PM by Connie Madon (RSS feed)
Filed under: Bad News, Short Stories, Financial Crisis

The SEC is charged with investigating potential illegal activities in the securities markets. The SEC is failing to carry out its responsibility when it cones to the collapse of Lehman Brothers last year.

The SEC has in front of them charges of excessively high volumes of "naked" short selling in Lehman shares. A "naked" short sale is one where you sell a stock short without first borrowing the stock from a willing lender.If you do not first borrow the stock you cannot deliver it. This is called a "fail to deliver" trade. Last year 32.8 million shares of Lehman stock were sold but the sellers " failed to deliver" the stock. 32.8 millions shares of "failed to deliver" trades is a staggering amount.

Continue reading What's wrong with the SEC investigation of Lehman Brothers?

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Hedge Fund Apocalypse: Massive short squeeze on Citi could wipe out dinosaur funds

Posted Mar 19th 2009 4:40PM by Alex Salkever (RSS feed)
Filed under: Bad News, Rumors, Short Stories, Citigroup Inc. (C), Money and Finance Today, Headline News

Citibank N.A.

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While Ben Bernanke's announcement that the Fed was buying Treasuries and sucking up bad mortgages was the cosmetic reason for financials to soar, an equally compelling reason may have been the massive but little-noted short squeeze that the announcement, combined with large government purchases of stakes in these companies, engendered.

Continue reading Hedge Fund Apocalypse: Massive short squeeze on Citi could wipe out dinosaur funds

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Doomsday Scenario: Rotten Apple, hedge fund lies, bad case of natural gas

Posted Mar 6th 2009 5:40PM by Alex Salkever (RSS feed)
Filed under: Analyst Upgrades and Downgrades, Bad News, Apple Inc (AAPL), Short Stories, Scandals, Smartphones, Technology

Apple, Inc. (NASDAQ: AAPL) is a company with $31 per share in cash on hand that just can't get a break. Analysts have begun downgrading the stock on fears that sales of Macs and iPhones will slow. As Apple hadn't been beaten down enough, shares dove today. Sentiment on Apple is rapidly deteriorating.

Meanwhile, Hedge Fund Research, a company that tracks hedge fund returns, released its February stats for how the hedgies performed. According to HFR, the hedgies beat the market soundly, losing only 0.5% in the month.

Continue reading Doomsday Scenario: Rotten Apple, hedge fund lies, bad case of natural gas

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Doomsday Scenario: Could Warren Buffett be wrong?

Posted Mar 4th 2009 5:37PM by Alex Salkever (RSS feed)
Filed under: Forecasts, Bad News, Management, Berkshire Hathaway (BRK.A), Short Stories, Economic Data, Recession, Comic Relief, Financial Crisis

Here's the latest PM dose of happy doom. Tyler over at ZeroHedge points out that CDS (credit default spreads) on Berkshire Hathaway are hitting all time highs, implying that the risks Berkshire's (NYS: BRK.B) robust cash machine could break down (and even default at some point) are rising fast. Piqqem Sentiment on Berkshire B-class shares is negative, natch, after Buffett's recent mea culpa for losing money last year. If Buffett has lost his mojo, then does anyone have any magic left?

Continue reading Doomsday Scenario: Could Warren Buffett be wrong?

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Doomsday Scenario: Just the numbers, ma'am

Posted Mar 4th 2009 7:00AM by Alex Salkever (RSS feed)
Filed under: Bad News, Short Stories, Economic Data, Housing

Even while dancing on the edge of the Great Abyss one should keep one's eye on the numbers. In this case, the key indicators that presage an economy at risk of totally imploding. Sure, the auto sales numbers were no worse than grim expectations and the ISM manufacturing number was actually a positive. But, oh, we have lots of nasty numbers to go around. Start with the RevPar number. That's short for revenue per available room at hotels and is a solid indicator of the health of the travel industry, as well as the state of business travel spending. The number? Down a stunning 15.3% in the month of January, year-over-year.

Continue reading Doomsday Scenario: Just the numbers, ma'am

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Textron: First TARP recipient from defense sector

Posted Feb 27th 2009 9:50AM by Alex Salkever (RSS feed)
Filed under: Bad News, Short Stories, Stocks to Sell, Financial Crisis

Three products that are probably bad bets in this environment are private jets, helicopters and golf carts. Add in a large captive finance arm and an auto parts unit and you have Textron (NYS: TXT), the latest hobgoblin to join the dividend slasher parade and corporate Deathwatch. The Piqqem Sentiment on Textron is hard negative. The good folks at Ockham's Research hammer home these points and more.

Textron has had trouble in the past accessing commercial paper markets (and it's surely not having trouble now, right?) and raising equity capital. More than 50% of the assets on the books of its captive finance arm are non-performing and that could worsen as more companies that owe it money start to tip over in the various blighted industries it services. Add a slashed dividend to spook value and institutional investors. The upshot? Textron is basically ready to keel over, unfortunately.

Continue reading Textron: First TARP recipient from defense sector

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Following short sellers back into financial stocks: AIG, WFC, BAC

Posted Feb 26th 2009 7:10AM by Douglas McIntyre (RSS feed)
Filed under: Short Stories, Bank of America (BAC), Amer Intl Group (AIG), Wells Fargo (WFC)

According to data from the NYSE, short sellers have not lost the lust for financial share and their bets that many stocks in the sector will fall is moving up. The data was collected as of February 15.

When banks stocks were being hit the hardest last fall, the government locked short sellers out of the shares in a number of companies in the sector. But, firms like AIG (NYSE: AIG) no longer have that protection. Short interest in the company rose 18% to 151 million shares.

Short sellers also aggressively moved into shares of Wells Fargo (NYSE: WFC), usually considered one of the strongest U.S. banks, and Bank of America (NYSE: BAC).

Continue reading Following short sellers back into financial stocks: AIG, WFC, BAC

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Seven signs you should short sell a stock

Posted Feb 18th 2009 2:50PM by Timothy Sykes (RSS feed)
Filed under: Google (GOOG), Apple Inc (AAPL), Dell (DELL), General Electric (GE), Amazon.com (AMZN), General Motors (GM), Hansen Natural (HANS), Short Stories, Schlumberger Limited (SLB), Bank of America (BAC), Chevron Corp (CVX), Morgan Stanley (MS), Stocks to Sell

These are not the only signs, just a few examples of when to bet against a company, all of which would have worked out great over the past year:

1. Right when management admits a massive fraud over many years, Satyam Computer Services (SAY)

2. Companies lie about the health of management: Apple Inc. (NASDAQ: AAPL)

3. Arrogance and greed blinds management to excessive risk-taking: General Electric Co. (NYSE: GE), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Bank of America (NYSE: BAC), General Motors Corp. (NYSE: GM)-pick an over-leveraged financial, any financial...and yes, considering all the messy financial instruments these companies took on, they are all financial stocks.

Continue reading Seven signs you should short sell a stock

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Short sellers look for price drops at Microsoft and Dell

Posted Jan 28th 2009 11:15AM by Douglas McIntyre (RSS feed)
Filed under: Microsoft (MSFT), Dell (DELL), Short Stories

Short sellers are moving into tech stocks at a rapid pace, in many cases probably betting that falling PC sales will hurt earnings at some big companies. Based on recent data on global computer shipments, the gamble will probably pay off.

For the period ending on January 15, shares sold short in Microsoft (NASDAQ: MSFT) rose 18% to 92.4 million compared with the precious two weeks period, according to The Wall Street Journal, Shares sold short in Dell (NASDAQ: DELL) moved up 15% to 60.5 million shares.

Continue reading Short sellers look for price drops at Microsoft and Dell

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Citi wants short sellers stopped, now

Posted Nov 21st 2008 9:47AM by Tom Taulli (RSS feed)
Filed under: Deals, Short Stories, Citigroup Inc. (C)

This week, the shareholders of Citigroup, Inc (NYSE: C) have undergone extreme trauma as the stock price plunged below $5. It's hard to believe that this company was once worth $200 billion and had a reliable dividend. Now, according to the Wall Street Journal [a paid publication], the company is having an emergency board meeting today and there is even talk of selling out to another bank.

In the meantime, Citi is trying to go on the offensive against short-sellers, who make money when share prices fall. The company is going to the folks at the Securities and Exchange Commission (SEC), who seem to be receptive. In fact, the SEC is trying to arrange a global regulatory response to short selling.

Of course, the SEC had a ban on short selling already for about a thousand financial services companies, but it has expired on October 8. No doubt, it didn't do much. If anything, the ban probably added to the overall volatility in the markets as well as reduced liquidity.

In other words, the move to ban short selling looks mostly like a cosmetic action and not something that will do anything about the deleveraging and the rampant fear on Wall Street.

As for Citi, it's just another sign of desperation. Let's face it, the company is paying the price for poor investments and risk management practices.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

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Carl Icahn defends short-sellers

Posted Nov 18th 2008 9:13AM by Zac Bissonnette (RSS feed)
Filed under: Other Issues, Short Stories, Scandals

Have you ever noticed that the people blaming the current economic mess on short sellers tend to be either A.) loud mouths who don't know what they talking about or B.) Failed CEOs turned corporate blame shifters looking for something -- anything -- to divert attention from their own miscues: people like Patrick Byrne and Dick Fuld.

In a post on his blog, Carl Icahn came up with an argument in support of short selling that I hadn't heard before:
In simplest terms, choosing not to buy a stock because you don't like the company is like refusing to be friends with a drunk. But shorting a stock is like sending a drunk into rehab. Many of these companies, drunk with money and neglectful of risk, should have been sent to rehab a long time ago.

It's possible that aggressive short-selling accompanied by a public campaign of red flags might have pushed companies like Lehman Bros. and Bear Stearns to take a look at their risk management policies before it was too late: Certainly Lehman might have avoided its fate if it had listened to David Einhorn's warnings about leverage instead of dismissing him as irrelevant and buying back huge amounts of stock.

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NASDAQ-34.902,778.79
S&P 500-9.641,295.22

Last updated: May 21, 2012: 01:45 AM

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