Looking at the chart for CKCM over the past year, it looks like there has been a pretty predictable run-up of the stock every quarter, starting 15-25 days after the end of each quarter (in anticipation of each earnings release). The run-up began on Oct ~17 '04, Jan ~23 '05, Apr ~25 '05, and Jul ~20 '05. As for what happens after the earnings release, there were two instances where the stock continued going up, and two instances where it went down (and for what it's worth, this happened in alternate quarters).
So here's the prediction: CKCM stays in the current range (plus or minus a dollar) for another couple of weeks, and we start a sharp run-up sometime between October 15th and 25th. I'm betting we'll end up somewhere between $23 and $28 on the earnings release date (based on the scale of past run-ups).
I'm not as confident about what happens after the earnings release, but given that we're coming off a down quarter and bad news is highly unlikely, I'd say there's a 75% chance that CKCM will continue to go up after the release as well (although not as quickly).
So if I were short this stock, I'd figure out a good time to cover between now and October 15th. Based on past history, I don't expect to gain much between now and then, but I'm running an increasingly larger risk the longer I wait. It's quite possible that the short covering will actually cause or fuel the run-up around mid-October.
If I'm long this stock (which I am), I would definitely hold this stock until the earnings release. After that, it depends on whether I'm a short-term investor or a medium/long term investor. If I have a medium/long term outlook, I'd definitely stay in. If I'm a short-term investor, I'd be in two minds about holding, because I think CKCM will LIKELY continue to go up after the earnings release, just not as quickly as the pre-release run-up.
That's my two cents on the subject. And I'm putting my money where my mouth is.
Good luck to all.
I brought this up just prior to last earnings (which was one of the reasons I sold some shares). But I think you're looking at something wrong if you think the stock has rallied just before each earnings release. My post (I'll never be able to find it at this point) showed how the stock would continue its immediate pre-earnings trend in the days following each earnings release. Just looking at the dates now (again, I forget the actual study I did, but this is a good parallel):
Q204, stock up 13.7% 4 days leading into release, went up an additional 21.1% the following 4 days
Q304, stock up 10.5% 4 days leading into release, went up an additional 31.8% the following 4 days
Q404, stock down 12.3% 4 days leading into release, went down an additional 21.7% the following 4 days
Q105, stock up 20.7% 4 days leading into release, went up an additional 59.5% the following 4 days
Q205, stock down 3.5% 4 days leading into release, went down an additional 29.4% the following 4 days
Seems like a pretty good indication that a fairly reliable pattern exists and it's certainly not one that shows consistent pre-earnings run-ups.
Hmm... well, I'll take your word for it. I was pretty confident there had been pre-release run-ups at least three of the last four quarters, but maybe my chart is a half month off.
Oh well, I guess I could've waited a couple of weeks to buy some more, but I didn't...
8 Form 4's on 05/12/05
all at 17.28
2 more in August @ 18.33
I agree the downside here is minimal. How many times are you able to buy a hot technology stock with forward PE of around 12.
The last insider purchases were in the high 17's so we are in very good shape.
PS: The pre-release rise in April was very small. Most of it came after the release. So you're right, the run-up may come in early November instead of October. Personally I'm not waiting that long to buy. But that's just me.
I got April 25th as an approximate date by looking at the chart. I just downloaded the full price history, and the price runup started on April 29th '05, when it closed at $9.39/share. A month later it was at $22.77. If that's not a run-up I don't know what is. That said, I agree that past history is not a perfect predictor of the future. However, I'm still betting that there will be a runup starting mid to late October. We'll see what happens...
"look at it however you want, but the price of the stock is what effects my account, not my perception of their earnings relative to yours. "
The implication from the post was that the reason that CKCM went down was because of "disapointing" earnings.
I think it was because of the fact that CKCM was up at that time more than 500% in one year -- meaning there would be many willing to take profits, that the general market favored shorting stocks after earnings, that the bTrade shares were sold the day after earnings (the lockup period expired) and that short interest increased a staggering 700K for a stock this size the month of earnings. In addition, there was a perception that CKCM may have "missed".
In any case, CKCM went down but I don't think the reasons were as simple as your post implied.
Thanks. Interesting findings.
Since we don't know when the run will start, we are better off taking a position right now, just in case the run start sooner this quarter.
In any case, it beats me how anyone can short CKCM right now. It's asking for trouble.
Long and considering adding to my position.
Agreed. I just added 500 shares to my position. By my estimation, I'm taking a downside risk of about a dollar for the next two weeks, for an upside of 5 to 10 dollars in a month. I figure the shorts have had their positions for a while. I doubt they'd be going further short at this time.
Everyone do your own due diligence. Best of luck.