Wednesday, May 04, 2005

Spud's Big Day

There really isn’t much to report since yesterday. So, I figure I’d give an update on Spud. He was first introduced to you all a week ago on April 26. He had an unusually large position in EBAY with a cost basis in the mid-31s. Initially, the position’s size alone was affecting his life outside of investing/trading. For example, he could not sleep well and he was too nervous to take his eyes off the screen to relieve himself. Fast forward one week.

EBAY has rebounded and as I write, it is now printing a new High of Day (HOD) at 33.50. Spud took on an incredible amount of risk. While the risk he took was likely imprudent and borderline foolish, it is paying off huge right now. Some may call Spud crazy, others might call him a gambler. But, like me, he puts money where his mouth is. I think there is a lot to be said about this quality. Put up or shut up, as the common idiom goes.

On Wall Street, when an analyst discloses that they have a position in a company, and that same analyst provides reasons why the company is a “Buy,” many dismiss the recommendation as self-serving. This is counter-intuitive to me, especially if the position is established very recently (around the time of the initial recommendation). Of course, if the analyst were trying to flip the shares for small jumps in price due to his hype, that’s a different story. But, if it were shown that his typical holding period for a stock was say, 2 years, then I think his recommendation should really hold more weight.

In other news… IAC Interactive reported very solid numbers in their latest earnings report. As a result, Ask Jeeves moved strongly to the upside. Go Butler. Also, Kerkorian (that ridiculously shrewd value-investing billionaire) has offered to pick up another 5% of GM for $31. While he’s not an analyst, he just gave GM a buy recommendation. Remember, action should be watched and followed a lot more than talk.

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