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Just a Bump In the Road
The Oxford Short Alert
Friday, May 27, 2005
By Alexander Green and Louis Basenese
#256
** Just a Bump In the Road
The Dow has jumped 5% in the last nine sessions. So has the Nasdaq. This has made it a little tougher on those of us with short positions.
But there are plenty of reasons for optimism.
To begin with, stocks with poor fundamentals often rally the strongest when the market takes an unexpected jump. Why? Ironically, because of other short-sellers.
When the market suddenly tanks, investors often grow panicky and sell for emotional reasons. They usually regret it.
By the same token, when the market suddenly bolts higher, fearful short-sellers will rush to buy-to-cover, pushing up the price of troubled companies. They too usually regret it.
The reason is simple. All stocks eventually rise or fall based on their business performance, not market sentiment.
Put more explicitly, share prices follow earnings. If a company does all the right things – introducing new products and services, increasing sales, growing market share, compounding earnings at a high rate, and so forth – shareholders will be rewarded.
And if a company does just the opposite – loses market share, sees flat or declining sales and earnings, and suffers from eroding margins – shareholders will be punished. (Or, better put from our perspective, short-sellers will be rewarded.) These are the companies we seek out.
Bear in mind that each of the companies listed below is struggling right now with fundamental problems. A short-term rally in the market is not going to change that.
So keep the faith and hold on to your short positions. Time and gravity should take care of the rest.
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
Too, Inc.
NYSE: TOO
$19.93
Sell short. Buy stop is $24.
UST, Inc.
NYSE: UST
$44.73
Sell short. Buy stop is $50.
Ethan Allen
NYSE: ETH
$31.17
Sell short. Buy stop is $36.
Cousins Properties
NYSE: CUZ
$27.88
Sell short. Buy stop is $32.
Winnebago
NYSE: WGO
$32.65
Sell short. Buy stop is $35.
SanDisk
Nasdaq: SNDK
$26.10
Sell short. Buy stop is $30.
CenturyTel
NYSE: CTL
$32.27
Sell short. Buy stop is $34.
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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