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SanDisk: Heading South for the Winter
The Oxford Short Alert
Wednesday, January 26, 2005
By Alexander Green, Investment Director
Email – #239
** SanDisk: Heading South for the Winter
We only began shorting SanDisk (Nasdaq: SNDK) a week ago. But the stock has already obliged us by dropping 13% in the first five sessions.
In particular, the stock is down another 3% today, even though the Dow is powering higher.
In fact, the majority of our short positions are dropping today, despite the fact that each of the major indexes is in positive territory.
One day, of course, does not a trend make. But it underscores the fact that we’re shorting vulnerable companies that are struggling, rather than strong companies some perceive to be “overvalued.”
There’s a crucial difference. Good companies will generally rally when the market is in an uptrend. And – let’s face it – the long-term trend in stocks is generally up.
That’s why it’s so important for short-sellers to target companies with poor fundamentals and even worse earnings prospects, rather than healthy companies with lofty valuations. Often the high P/E on a rapidly growing company is well deserved. (And when the blockbuster earnings come in, those ratios may look pretty darn reasonable.)
Our strategy, instead, is to cull out the weaklings from the herd.
Each of the companies listed below is grappling with serious business problems. And each is likely to disappoint shareholders in the weeks ahead. When they do, it’s likely to afford us some short-term opportunities to cover at a profit.
So stay the course.
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com, or contact Pillar One Advisor Greg Galloway at 800.438.3040 or 407.667.4729.
Stock
Symbol
Current Price
Comments
SanDisk
Nasdaq: SNDK
$21.68
Sell short. Buy stop is $30.
Ceridian Corp.
NYSE: CEN
$17.51
Sell short. Buy stop is $22.
Dean Foods
NYSE: DF
$33.04
Sell short. Buy stop is $38.
CNH Global
NYSE: CNH
$17.90
Sell short. Buy stop is $21.35.
CenturyTel
NYSE: CTL
$33.13
Sell short. Buy stop is $39.67.
Safeway
NYSE: SWY
$18.95
Sell short. Buy stop is $21.
Janus
NYSE: JNS
$14.68
Sell short. Buy stop is $18.
Bio: Alexander Green is the Investment Director of The Oxford Club. A Wall Street veteran, he has over 16 years experience as a research analyst, investment advisor, and professional portfolio manager. Mr. Green is also considered one of the most talented financial writers in the business. He’s been featured on “The O’Reilly Factor,” profiled by Forbes and Marketwatch.com, and has written for Louis Rukeyser and several other leading financial publications. He currently writes and directs The Oxford Club Communiqué, the Oxford Insight e-letter, and four elite trading services: one focused on momentum stocks, another focused on companies with significant insider buying, another dedicated to international growth stocks and another focused on short-selling fundamentally flawed companies. Mr. Green is also a top-rated speaker at financial conferences around the country.
Copyright – 2005 The Oxford Club, LLC. The Oxford Club does not act as an investment advisor or advocate the purchase or sale of any security or investment. The Oxford Club expressly forbids its writers from having a financial interest in any security recommended to its readers. All of our employees and agents must wait 24 hours after an Internet publication prior to following an initial recommendation. And for hard-copy-only publications, 72 hours after the publication is mailed. Investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. The Oxford Club provides its members with unique opportunities to build and protect wealth, globally, under all market conditions. The executive staff, research department and editors who contribute to The Club’s recommendations are proud of the reputation The Oxford Club has built since its inception in 1984. We believe the advice presented to its members in our published resources and at our meetings and seminars is the best and most useful available to global investors today. The recommendations and analysis presented to members is for the exclusive use of members. Copying or disseminating any information published by The Oxford Club, electronic or otherwise is strictly prohibited. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time.
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