Monday, March 20, 2006


Shorting Disloyalty

A solid day today as my portfolio gained 0.5 percent. For the first time in a very long time I have added a short position: Eloyalty (or Disloyalty as I like to call them in jest since my own loyalty towards the stock has turned 180 degrees). You see, I owned ELOY a few years ago back when the stock was trading in the mid-3s. I rode the stock up to about $6 and then sold. However, if you ask me, the company's fundamentals were better back then (certainly they had a lot more cash on their balance sheet). Yet, despite consistently losing money, the company's stock has moved up sharply. Now that the stock is starting to weaken, I figure this is a good time to pile on. Aside from TZOO, my experience with shorting has not been particularly good, so this will be a small position.

I like this call Stockcoach. Take a look at the latest earnings report. This is really a classic. Management praises itself for the "milestone" achievement of 21% sequential quarterly growth in managed services to almost $5M. Sounds good, right? Sure, until you look at the same quarter in the prior year, where managed revenues were $5.275M. So the "milestone" turns into a 3% year-over-year decline. Nice performance guys.
Yeah, and don't forget their rather creative use of the words pro forma
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