Review of our 2011 stock picks (and closing 2 trades)

By: ispeculatornew
Date posted: 02.02.2011 (5:00 am) | Write a Comment  (9 Comments)

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Well, it did not take much time did it? One month after the start of the 2011 year, we are already closing out 2 trades among the 5 that we opened in that initial week. One winner and one loser. Is it good news? You bet. The winner is a big one and among those 5 trades, 4 are in positive territory right now. Without further wait, here are the results of our trades:

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As you can imagine, the two trades that we are closing are:

Long Amazon (AMZN) & Short The Knot (KNOT): -29.13%

I have always considered the Knot to be a risky pick because it is so volatile and I certainly could have seen a possibility of the stock gaining but I certainly did not anticipate that Amazon would lose so much after its earnings mostly because of disappointing guidance for the next year.

Long Dice Holdings (DHX) & Short Monster Worldwide (MWW): +63,96%

Rarely would I ever let a winning trade go on for so long but the momentum was simply incredible. This is exactly the type of deal that I like to make. Two companies that have similar business models and operate in the same market but one of them is much cheaper than the other. In this case, Dice Holdings has looked like a cheap stock compared to Monster for a long time and while I have made this pair trade in the past, I could not even hoped for such a quick and rapid progression. Both names announced results in the past few days and needless to say that investors were not impressed with Monster. I have not yet listened or read transcripts of their earning calls but you can see by looking at the charts how great things turned out to be.

What’s next?

I will be opening two new trades in the next few days depending on when I get a chance to study the possibilities. I would say that there will probably be a new one on Monday and you might see me going short on Yahoo (YHOO) which is no surprise if you read Monday’s post about the company!

Disclosure: After closing out these positions this morning, the remaining positions on these names will be:

Long: Apple (AAPL), Priceline (PCLN)

Short: Blue Nile (NILE), IAC Interactive (IACI)

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9 Comments

  1. Comment by Remus — February 2, 2011 @ 10:04 am

    Any thoughts on the IACI? Personally I would have thought they will get hit with today’s earnings report but it seems not… maybe some short term enthusiasm still?

  2. Comment by IS — February 3, 2011 @ 8:30 pm

    @Remus – Difficult one but in general I’m not a fan of IACI no, are you bullish?

  3. Comment by Remus — February 4, 2011 @ 8:23 pm

    I just don’t like the fact there’s some analysts upgrades flying around for the stock. While most “analysts” are useless sometimes they can form a short term opinion. Anyway we will see what happens; I for one opted out of short IACI deemed it too risky for now.
    In another line of thought though today’s short squeeze in Nile was incredible. I tried shorting today;s squeeze but no luck… no shares were available in Scotia. we’ll see what happens next week. fed with their POMOs distorts the market big time… each day they push us in green it seems. it hurts us the shorts 🙂

    keep it up!

  4. Comment by IntelligentSpeculator — February 5, 2011 @ 8:06 am

    @Remus – Very interesting, so any idea what caused today’s squeeze on Nile?

  5. Comment by Remus — February 5, 2011 @ 10:25 am

    I think we experienced just a typical short squeeze which are not uncommon in stocks with such huge short interest.
    Nile has a huge short interest you saw… Blue Nile, Inc. (NASDAQ:NILE) has the 3rd highest short interest in this segment of the market. Its short interest is 35.5% of its total shares outstanding. Its Days to Cover is 25.98, calculated as current short interest divided by average daily volume.
    From my knowledge anything with days to cover greater than 9-10 is a perfect candidate for what we experienced here.
    The big question though remains were all these shorts anticipating something we don’t? 🙂 Like a positive earnings release coming February 10?
    With the FED pumping us up and up I am a little concerned there… anyway we’ll see what happened with the short interest once they publish the report for end of January http://www.nasdaqtrader.com/Trader.aspx?id=ShortInterest

    At what price though will you be throwing in the towel and cover?

  6. Comment by IS — February 8, 2011 @ 5:03 am

    @Remus – Thanks for that link, I was getting short interest from a third party source, where do you get the rankings for the stocks with the highest short interest?

    Any better clue what is happening with KNOT? That is the stock that is making me clueless right now:)

    As for the trade, it is actually still in positive territory thanks to Apple so no plans to close it for now:) I’m confident NILE will once again display slow growth in its next earnings:)

  7. Comment by Remus — February 8, 2011 @ 8:19 am

    In google finance when I watch a stock they include to the right of the page articles about it, one of the links in there was the one with the short interest.

    What I saw in KNOT in the past days is a tendency to act soft. It was slowly falling in a rising market or falling pretty hard in a falling market (even though thanks to Mr FED we did not have that a lot…) That to me is saying the stock is in a downtrend now. how much is anyone’s guess… but to the 9ish range is a possibility and i do hope that’s the case; it seems like a perfect stock for a correction if we EVER have a correction in this market. If they miss the earnings hopefully they’ll get hit.
    Why did you close it? you lost conviction in the trade or simply saw it moving against you for too long and said enough is enough my stop loss is reached?

    NILE… again yesterday it was rallying. I tried to short and no shares were available again, so it seems the bulk of people still didn’t cover I think. So that might work for the shorts… but we’ll see. Their earning will be key. I wish you luck on it… since I am out due to lack of shares for short 🙂

  8. Comment by Remus — February 10, 2011 @ 10:40 pm

    Congrats on Nile… what a nice short this would have been if only shares would have been available… missed this one.

  9. Comment by IS — February 12, 2011 @ 2:12 pm

    @Remus – Thanks a lot:) I will be closing off the trade on Monday, as it is now over my +20% winning ratio and I won’t get greedy on this one!!

    Did you see KNOT on Friday? Amazing…

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