New Trade: Long Travelzoo ($TZOO) & Short Blue Nile ($NILE) – Battle Of Falling Knives?

By: ispeculatornew
Date posted: 04.09.2012 (5:00 am) | Write a Comment  (4 Comments)

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It’s been a solid couple of weeks here for the stock picks. Despite being unable to close out new ones, my average long&short tech stock trade now averages well over 5% giving an annualized return over 50% so far this year. It doesn’t quite matchup to last year’s return but it’s still good enough for personal satisfaction. Add that to the current 2nd place in the stock picking competition, and a very solid performance of my 2012 Tech Stock Power Rankings (more on that in a few days) and you get the picture.

Thankfully, today I get a new option to trade. After announcing that I would now own up to 7 tech long & short trades at once last year, this is the first time I get the chance to do it. This and the upcoming Facebook IPO (FB just confirmed it would be listing on Nasdaq) expected to occur in May, these are good and exciting times. Today, I am opening a trade between 2 stocks that have been getting crushed in recent months, as you can see in their dismal trend analysis scores:)

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Long Travelzoo (TZOO)

Well, funny how things happen. After spending much of last week researching Travelzoo, in order to determine if I did have regrets picking it as one of my 4 stock picks for 2012, I felt truly positive about the company. I did express my views on the company on Friday. Then, when looking through the companies that I follow this weekend, buying Travelzoo against Blue Nile seemed like a great opportunity. Why? They trade at comparable P/E’s despite having very different stories. I do think that this trade will end up doing very well:)

 

Short Blue Nile (NILE)

I know, I know, I look like a Blue Nile “hater”. I’m not. I’m just stunned over and over (and over and over) that the company continues to trade so expensively after so many years of continued disappointments. I did have a few successful trades already this year shorting Blue Nile against Apple 3 different times, all very successful trades!!! After that, I felt like I needed to get off of the bandwagon a bit in case NILE had a rebound. The stock has continued to fall though… but I still feel it’s overvalued. Clearly not as much as it was in January, but still overvalued. The company has absolutely no argument to justify its high price, its high P/E ratio, etc.

 

Disclosure: No positions on Travelzoo (TZOO) or Blue Nile (NILE), this trade will be opened on Monday morning

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4 Comments

  1. Comment by Ken — April 9, 2012 @ 6:11 am

    It’s no surprise to me that NILE is overvalued. Brokerage firms have made it difficult to short. The current annual charge at Interactive Brokers is 11%. It was 16% during your previous shorts this year.

  2. Comment by IntelligentSpeculator — April 9, 2012 @ 6:35 am

    @Ken – Yes no doubt, it’s not a short that you’d want to hold for too long…

  3. […] New Trade: Long Travelzoo ($TZOO) & Short Blue Nile ($NILE) – Battle Of Falling Knives? Financial Resources Buying Life Insurace Highest Yield Dividend Stocks Your Browser does not support iframes. Archives Select Month April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 August 2007 July 2007 June 2007 May 2007 April 2007 March 2007 February 2007 January 2007 December 2006 0 […]

  4. […] has generally been a good stock to trade for me and it turned out very well went I went long TZOO just days after expressing why I believe Travelzoo represented a great opportunity. Among the […]

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