3 MoMo Microcaps To Sell Short
Posted by Timothy Sykes on Tue 16th of Oct, 2007 06:28:47 PM
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Short Selling microcaps is one of the most difficult trading strategies around and yet for all the risk and volatility involved, I’ve devoted my life to these kinds of plays and managed to make a million or so from this one particular strategy. Check out the latest batch of potential shorts (I currently have no positions, but I’m watching intently as I stalk my
prey!)
Private Media Group, (Nasdaq: PRVT), a $165 million provider of premium-quality adult entertainment products, not only has a clever name, but their stock has doubled from the $1.50 to $3 range over the past three trading days on strong volume. Why? Rumors of a buyout, increased awareness of their plans for mobile phone “content”, the potential to be the next New Frontier Media (Nasdaq: NOOF) (not NOOF’s recent performance—no—NOOF circa 2003)—who knows and who cares! Their fundamentals stink—for their last quarter, revenues were down 21%, DVD & magazine sales fell 38%, but they were marginally profitable. Barring any news, I expect PRVT to fade back into the shadows over the next few days.
Immunomedics, (NASDAQ: IMMU), a $243 million biotechnology company, has risen from $2.22 to $3.24 in two trading days on even heavier trading volume, but they received a patent for their product candidate hPAM4 to treat pancreatic cancer. Yeah, I don’t know what that means either, but I know enough not to jump at Short Selling a biotechnology company with patent or cancer news. The fact that their PR includes both of these terms makes me hesitant to short at all although the stock is down from $6 earlier this year so there are more than a few people who will jump at this chance to cut their losses—making a reversal likely.
Soyo Group (OTCBB: SOYO), an $80 million consumer electronics company, has more than tripled from the 50 cent range to $1.65, breaking the $1 barrier for the first time since 2005. The rise can be attributed to news that they announced production of their first Honeywell Products and full year revenue guidance of $98 million, above previous expectations of $88 million. While this news sounds great and all, this is a very low margin business (15 percent) and it’s still unclear as to SOYO’s relationship with Honeywell. In the absence of facts, hype takes over and presto, the stock triples. It is telling that Honeywell’s ticker was not included in the press release. This could be just the beginning or the end of the run—there’s no way to know….yet.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider these companies to be smallcap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
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