Big Stock Movers
|Written by Rob Goldman|
The Past and the Future
To our many faithful readers, my sincere apologies. As many of you are aware, I live in the Mid-Atlantic. In fact, although I have traveled extensively, this area has been my home since my birth. We have gone through some wacky things here but I confess that the weather has been unusual over the past 30 months. In early 2010 we were hit by 2 blizzards that gave us roughly 2 feet of snow—-twice in less than 10 days. We have been hit with the remnants of a hurricane, which left many without power for a week. Now, after this past weekend, we have been smacked yet again, by what is called a super derecho.
Once again, many of our friends and neighbors are still without power despite horrific temperatures.
Each time we have been hit, we have been bloodied but recover strongly.
The same thing has happened in the stock market during the past few years. We have been hit multiple time by Europe problems, high oil prices, scandals, poor IPO performance, economic slowdowns, political wrangling, geopolitical issues, etc. Still, the market has moved forward and we are now roughly 10% below our high of the past 3 years on the Russell 2000 Index. At the end of the day, while all of these issues matter, valuation and choice, or proper investment options, play a role in the U.S. equities market.
2Q12: By the Numbers
Just like in 2010 the performance for 2Q12 has been anything positive.
And June’s performance was enough to give investors with intestinal fortitude some indigestion.
How Did We Fare?
As noted, Q2 was quite an eventful period. At the end of the day, all the major indices declined, with the Russell 2000 Index, a close barometer of stocks featured as part of our Select Research products, dropping by 3.9%.
Despite the rollercoaster, our picks fared extraordinarily well, averaging very high positive returns. The returns were even higher when one looks at the peak performance of the recommendations. For example, at the end of Q1, which was also stellar, we noted we still liked a few of the stocks featured during the period. These 6 picks did extremely well.
Even with one really bad performer, our 6 Goldman Guide features still managed positive gains, as a group.
We have been crowing about our daily blogs, called the Market Monitor, where we provide intra-day stock picks and pans, and market commentary. Pardon the expression, but these profiles kicked serious ass during Q2. We know many of you visit our site just for microcap stock reports, The Goldman Guide or The 30-30 Report. But, we are proving every day that if you are active in the market, you must visit the site each day to peruse our trading alerts/ideas, which are meant to be short term ideas.
Speaking of short term ideas, in the last of our shameless plugs for the day, our premium 30-30 Report newsletter is not too shabby either. Our first stock picks have strongly outpaced the market, especially when measured on peak performance numbers.
Select Research: Trick of the Trade
It’s time to play a game called, “Trade Like a Hedge Fund Manager.”
Russell Investments, the proprietor of the well-known Russell 2000 Index and a whole host of others, is set to officially change (they call reconstitute or re-balance) the holdings in all of its indices on Monday. While they have given investors a peek into who is in and who is out in recent weeks, the final list was not out until after the close on Friday and does not take effect until Monday June 25th.
Why is this important enough to mention here? Well, many professional managers, mutual fund managers, and hedge funds use these indices as a benchmark. This means that they buy and sell stocks in these indices and try to overweight some, and have smaller positions in others, in order to outperform their underlying benchmark.
So what happens? If a stock is being deleted, it may have to be sold by some funds, if it hasn’t been already. Conversely, additions may have to be bought. Since the final list wasn’t out until last Friday, there may be some opportunities to make a quick buck in these new additions.
But there is another interesting thing about these changes. We pored over them with a fine toothcomb, especially the Russell 2000 and Russell Microcap additions/deletions. The deletion candidates include those under $1 and under $30M in market capitalization. So, stocks that have dropped below those thresholds may come under some selling pressure.
Moreover, if you take a close look at the Russell Microcap Index additions for example, you see that there are some real high-fliers of late on the list. Some of the names include stocks we have featured in the daily blogs like Reed’s (NASDAQ—REED— $3.20) and Parametric Sound (NASDAQ—PAMT—$9.23).
This tells us that the stage may be set for stocks that have done well recently. These guys may continue to get play while those stocks that are not momentum plays may drift lower. This could be very good intel to use as a trader or an investor for the near term.
Until next week…
Analyst: Robert Goldman
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This report or newsletter does not take into account the investment objectives, financial situation, or particular needs of any particular person. This report or newsletter does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with the FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com.