Monday, July 21, 2008

Short Squeezers clawed!

The bulls gored the bears, but now the bears regained their claws with the after hours action. American Express has lousy earnings and trades down 5, Apple gives lousy guidance and trades down 18, Texas Instruments trades down 3 1/2 and Sandisk trades down 2 1/2 on a lousy outlook, and even Merck wasn't spared, and is down 5 after punk earnings.

There is no question that the economy and the outlook is terrible in the US, and even getting worse in Europe. Stock prices already reflect that.

The enterprise values of many of these companies are being discounted to extreme levels by the overreaching bearishness of the "naked" short selling crowd.

Bluegreen (BXG) got a cash bid of $15 after the close, and the stock was trading at $6.44. What do they do? Timeshare vacation resorts. Although business is down, the takeout price was 2 1/2 times the market price. You may argue that this was a small company. How about DNA then?Why did Roche offer $44 billion for the Genentech it doesn't own? For a headline?

Or was it because the market is undervaluing the enterprise values of these companies?

Sandisk is trading at 15, with a market cap of $3.37 billion, with almost $2.5 billion in cash. Is the takeout value of this company worth more than it's current market cap?

A week ago today, Cramer ended his show telling people to sell the banks, right before the huge rally. Now he's screaming he doesn't have any tech. Which means you have to start to take some positions in at least a couple of names.

So when the bears go crazy tomorrow morning, put in some bids and pick up some stocks.

And wait for Cox to expand the "naked" short selling rule, if the bears decide to press their bets again.

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