NASDAQ did its most terrible drop since Nov 2011. What’s the hint behind that? Do you guys think it’s a healthy correction of the market OR it would direct a long term drop OR it is just a short term shock and would bounce back soon (I don’t believe in this)?
Maybe people are realizing stocks like Amazon are trading at a P/E of 563…
^nah lol
No one knows. I think it’s tax selling and a general correction for fast / short-term money. The market has been way overheated for some time with a lot of investors chasing charts just because they are going up. A lot of really awful stocks are way, way up, so it’s time for a pullback. My longs are down but my shorts are down a lot more, which is how it’s supposed to work so thanks for that stock market. Most of my shorts today are down 3-5% or more, which means several of them are still 95-97% overvalued at today’s price but I’ll take a down day.
Unilife continues to have a bad few weeks in a prison shower, lol… goinnnn’ to ZEEEEERRRRROOOOOO
At some point it’s not even about money anymore, it’s about seeing bad people financially carried out in a body bag.
^What are some short ideas apart from Unilife? Unipixel?
INO
I am not short UNXL or INO. UNXL I missed unfortunately but is clearly a “not legitimate company” for lots of reasons (I will avoid potentially incurring legal risk that might accompany me hypothetically saying it is a complete, total, unmitigated fraud through-and-through to the core). I don’t know if you can short it here because it’s down so much and has a lot of cash. Long-term on a multi-year basis that stock is lower than today but I don’t think it’s a great short now.
INO I have no opinion on but Rick Pearson seems to, and Rick does excellent work (I’ve met him, totally legit guy).
Some of my biggest shorts are HCI, RGR, KEYW, and UNIS, among others. All of those are profitable positions for me today but I would add to any of them as well with new capital. Stocks can move around so I have no idea in the immediate or short-term but long-term they are all going down in flames.
How exactly do you look for this stuff? Granted, screening for longs is not easy either, but shorts even more difficult…
Interesting…looks like you’re not screening for high PE stocks.
Everyone and their mothers now know that the 6 month favourable period in stocks is November-April.
It’s just people beating the crowd to the exit.
I agree but it’s year-to-year. There wasn’t much of the May seasonal impact in either of the last two years. I think there will be this year.
Carefully. I spent a year building a proprietary sourcing platform. I have lots of good ideas, not enough time to vet them all. High P/E / superficially expensive stocks can make good shorts but many of them are high quality businesses – we are not hear to short TSLA.
Most of my work is based on mean reversion time arbitrage over a 2-3 year period. Did HCI deserve to trade at 4x TBV when the most expensively valued P&C insurance company in history was Fairfax in 1999 (bubble) at the same multiple? Hard to see how that could possibly be true. In reality, HCI is a 1x TBV P&C company with no moat / differentiation. The “why now?” is they had a nice arb that juiced the P&L but is over and is now rolling off. That stock has nowhere to go but down and the P/E ratio is meaningless, although I will grant that quite a few people own it based on the P/E ratio.
RGR is similar – this is a good company but it’s trading at 50-60x normalized P/E and the earnings are going to get whacked pretty hard in coming years, starting now. The people who own it, own it because it was / is selling for 12x P/E with a history of growth don’t know what they own.
Come on. It’s not like seasonality is that predictable. Even if it was, any free profits would soon be eaten up by arbitrageurs.
Not true, most managers need to be more or less fully invested most of the time. And you can’t “arb” the entire market moving unless you go with an index, but the biggest moves are in certain parts of the market, not the entire broad market. It is true and it works, but it doesn’t work all the time, it is about 70%.
Look at the last 65 years. You will be surprised. This is the mother of all seasonal patterns.
As Bromion mentioned, nothing works 100% of the time. But I’d take 70% anytime.
Fuck. A “good friend of mine” is involved in a biotech stock (one of the most speculative type, i.e. no revenues) block trade this week. Not easy.
Edit: On topic: I think the seasonality is negligible. I know for a fact that there is a Biotech sell-out.
It could also be that people are realising that no company with 50 employees should be selling @ 17 B$.
Lots of the biotech frauds are selling off right now (all biotechs are selling off in general). There is some number – in the dozens – of these companies that are worth literally nothing.
More than just biotechs are selling off though, this is a momentum reversal decline with all of the most momentum oriented stuff selling the hardest. Biotech was up something like 65% last year.
I think if you just wanted to make $5-10mm within 3 years, you could just start a reverse merger fraud 1-2 years after the bottom of the cycle, pump it during a bull run, cash out and go sit on the beach for the rest of your life. I found a zero revenue company the other day that issued the 5 employees (100% of the company) a bunch of warrants at $0.0001 per warrant and then gave their underwriter a bunch of warrants at $1.50 as compensation (who then proceeded to pump the hell out of the stock). The stock went to $6.00 and the CEO puked a bunch of stock in the open market. I want 1,000,000 warrants at $0.0001 that go to $6.00… T_T
you can buy an OTC shell for like 80k thats fully reporting. reverse merge. then pay 100k for a pump and cash out. rinse and repeat for few years. dont get too greedy and u should be good to go with 5-10 mil
having tracked a number of these it would be very easy to do this. obviously the SEC is complicit with it or they would have shut down the literally hundreds of US public companies that are doing this right now. why work when you can just steal other people’s money by selling magic beans or some other ridiculous business model?
i would never do that but it’s frustrating to see that the government does absolutely nothing to stop it.
ctic is amazing with it’s negative $1.9 BILLION – OMFG – retained earnings balance. i’ve heard the guys running the company literally travel with body guards.
lol. just look at the thousands of penny scams that have been around for years. the sec only shuts down a tiny percent every year and the majority get away even though they are share selling scams. i dont think my conciense will let me do that though
Sadly I can’t do it either 
But they are so easy to spot and transparent, it’s hard to understand why they still exist and why anyone would invest in them.