Thursday, February 4, 2010

Unnatural Action

Last Friday, I bought 1000 ATPG at 14.65. I had already made some walking around money with this stock and this was cheaper than I had bought it before. It had come down from the region of 20 and the expectation was that it would regain that promontory in time.

On the other hand, the market was on the cusp of a correction of unknown magnitude which could drag everything down with it. And did I say that oil stocks make me nervous? So, on Monday, after the stock had spiked up at the opening, I sold my stake for 15.20, with the idea that I might be able to buy it back lower. The notion that the managment of this company was playing a very risky game with shareholders' money was not in my calculations at the time.

Naturally, after I sold, the stock kept climbing and closed at 15.52, its high for the day. It was time to try a little patience. On Tuesday, it kept climbing and achieved 16.25 at one point. Then, at 3:48 PM, just before the close of trading, ATPG management issued a press release and, in the remaining 10 minutes, the stock dropped like a rock and closed at 15.47. In after hours trading, the stock continued to slide, below 15 - way below. I quickly read the press release and it seemed benign: production up by a third and some senior debt was being reconfigured for the long-term benefit of the company. I checked the Yahoo! Message Board for ATPG to see what kind of chatter was going on and they seemed as puzzled (i.e., ignorant) as I was. Still, the going price seemed to stabilize in the low 14's, so I bought my thousand back for 14.25. At the close of after hours trading, it settled in around 14.80. I felt gratified.

Wednesday, I tried to find out what was going on with the company. There was precious little news, but the tape never lies. Eventually, I read a piece that said, sure, production was up a third, but it was expected to double. And the financial maneuvering was a panic move by management to stay afloat when the expected production wasn't there to service their debt. I quickly sold out at 14.64 and was glad to get it. Right now, it's going for 13.16.

If you're smart and know what you're doing, you don't have to be lucky. If you're not smart, it really helps to be lucky. The moves I made since last Friday weren't completely stupid, but blind luck got me out of a treacherous situation with a small gain, rather than a big loss.

I don't plan to trade ATPG anymore. I promise.


Anonymous said...

Hello Brothers n Sisters

Looks 4 sure like seems to be a great forum for me
I am happy to have stumbled upon it.

This made me smile and hopefully after your last post it will do the same for you: If you can see this, you’re not blind, which is a very good start. :


Anybody like Horse riding

Looking forward to a good long sojourn here!

New York,Montebello

Larry Blumen said...

Anonymo: Thanks, I think.