The high-tech crash has had harried traders spilling their guts on analysts’ couches.
Due to the wonders of high tech, this conversation between a rabbit-eared trader and his shrink wound up on the desk of your resident sleuth.
TRADER: “Help me, doc, I’m hearing voices!”
ANALYST: “Voices, eh? What does the voice tell you?”
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TRADER: “That’s my trouble, doc. There are two voices. I don’t know which voice is giving me the straight goods.”
ANALYST: “Tell me, which is your good ear?”
TRADER: “I’m a right-eared trader.”
ANALYST: “Right, what do you hear in your left ear?”
TRADER: “It’s screaming at me: ‘KEEP YOUR POWDER DRY, GET OFF THE TRAIN TRACKS, DON’T BUY TECH!!!’ ”
ANALYST: “And what do you hear in your right ear?”
TRADER: “It’s screaming: ‘THE TRAIN IS LEAVING THE STATION, BUY THE TECH STOCK, IT’S A SWING TRADER’S DREAM!!!’ ”
ANALYST: “So did you do the right thing before the train left the station?”
TRADER: “That’s MY question, doc. That’s why I’m here.”
ANALYST: “OK, let me rephrase the question. Which ear did you listen to, left or right?”
TRADER: “I listened to the right ear, which I thought was right, and then the wrong one, which was the left, and then I tried to listen to both of them at the same time and . . .”
ANALYST: “So you bought the tech stock, right?”
TRADER: “Not exactly, doc. The bid/ask prices were $1.15-$1.25 so I typed in EMG with my right ear and bid $1.16 with my left ear. It was Friday afternoon and I always get my price on Friday afternoon. (Sobbing) This Calgary electronics manufacturing company was a $6 stock three months ago!”
ANALYST: “Oh, so you had a breakdown. E*Trade crash again?”
TRADER: “No, I heard this awful racket, a clanging sound. It was the closing bell at the Toronto Stock Exchange. I’d been shut out!”
ANALYST: “I’m not a FINANCIAL analyst, but I can tell you that you’ve learned something very useful. Your left ear is your good ear, right?”
TRADER: “Not exactly, doc. The stock opened at $1.30 on the next trading day and the train left the station. It closed at $1.55. If I grab the 2000 shares on the ask at $1.25 and sell at $1.55, I make $425 after commissions and my summer vacation in Acme is paid for . . . ”
ANALYST (shouting): “Stop fantasizing and lend me your ears! Both of them. WHAT DID YOU LEARN FROM THIS EXPERIENCE?”
TRADER: “That’s my trouble, doc. I learned I don’t have a good ear. Both of them have a listening problem. Got any earplugs?”
ANALYST (checking pocket watch, breathing sigh of relief): “I’m afraid your time is up. See you next week?”
PRO'S THREE STARS
Brian Bapty, biotechnology analyst with Raymond James, continues to champion two of his top three picks from January – StressGen Biotechnology (SSB-TSE) and Inex Pharmaceuticals (IEX) – as strong buys.
His new pick is QLT Inc. (QLT-TSE), which he rates as a strong buy with a 12-month target of $44. The stock had a recent price of $29.96 (year range, $26.23-$120.00).
“I think near-term QLT has the most upside of these three stocks,” says Bapty of the pharmaceutical company.
“I think they’re probably going to come out with a pretty attractive quarter and the stock’s going to rally. QLT, I think, is a great trading opportunity and it could turn into a very attractive investment. If the wind gets into its sails and the stock starts to rally, I think you’ll see the company will grow aggressively. It’s cheap. In a choppy market, people are looking at companies (like QLT) with money and cash flow.”
The Vancouver-based analyst favours StressGen (recent price $5.65, year range $4.30-$10.20) and Inex (recent price $5.75, year range $3.20-$10.00) over the longer term. His 12-month target for StressGen, a developer of immunotherapeutic products, is $15.50 and his 12-month target for Inex, a pharmaceutical company, is $10.50.
“We’re looking for selective joy over the year,” Bapty says of the biotech market. “I don’t think you’ll see a mass rally.”
He continues to recommend Micrologix, a previous pick, but with “constrained upside.”
Bapty’s Record: -3 per cent (StressGen -10 per cent, Inex +16 per cent, Micrologix -15 per cent).
* CHEERS: To CNBC interviewers, who, unlike some of the cheerleaders on ROB TV, aren’t afraid to ask the tough questions.
When Goldman Sachs analyst Laura Conigliaro raved about some tech stocks recently in an interview with Ted David, David surprised the analyst by asking her if Goldman Sachs had positions in those stocks.
CNBC reporters also routinely ask analysts to explain dubious past performances.
* JEERS: To Conigliaro, for awkwardly sidestepping David’s query by responding: “I don’t know.”
HOT ALBERTA STOCK: BW Technologies
BWT-TSE $10.80
Up $1.70 (+18.7 per cent) on 264,857 shares (for week ending July 12).
Few people have even heard of BW, but the word is getting out as investors search for safe havens. The share price has caught fire again and isn't too far away from catching that of a company you may have heard of — Nortel. The Calgary-based manufacturer of industrial gas-detection instruments released knock-out financials for its fiscal year ending April 30 — earnings of $2,844,000 (51 cents a share), an increase 131 per cent over the previous year. As a result, Taurus Capital boosted its 12-month target to $17.50 from $12.
COLD ALBERTA STOCK: Highwood Resources
HWD-TSE 51 cents
Down 15 cents (-22.7 per cent) on 21,247 shares (for week ending July 12).
Highwood has been one of the high fliers among penny stocks on the TSE this year, with its stock more than doubling since January, so this dip isn't overly surprising. The Calgary-based company has a profitable core business in industrial mineral production, but much of the recent interest in the stock stems from its intriguing Thor Lake beryllium project in the Northwest Territories. Beryllium is a rare precious metal.
