On February 13th, BetaKinetix Partners, a student-run research outfit I founded, published an article regarding Palm (PALM). As is well known by now, Palm shares have zoomed 21% since then on rumors of a potential takeout, the shorts have gotten their heads handed to them, and the Treo 750 has officially launched, even while Palm was off busy hiring an investment banker to help it clean house.
We’ve have received dozens and dozens of emails regarding Palm stock over the last few weeks, and we are thrilled the trade (in which we participated by going long the Mar 17.5 calls) worked out.
As part of my duties as VP of Equities in the Kelley School of Business MBA Investment Club, I work and trade everyday alongside fellow student investors who are, like me, quite serious about trading and capitalizing on short term opportunities. On March 20th, I presented to the MBA program’s Investment Club a quick “Top 8 Reasons Why Palm Was a Table Pounding Buy @ $15.” I’d like to share the highlights with SeekingAlpha readers and use this opportunity to both follow up on that first article and distill what I think were the key drivers of Palm’s rapid ascent.
1) Hedge fund buying hits my 13D screener: The Galleon Group, LP buys 6.2% of Palm in late January. Cognizant of the hyperintelligent, rapacious manner in which most hedge funds operate, I immediately start ripping apart Palm’s latest 10K. I’m aghast at Palm’s customer concentration risk and pricing environment, but I turn cheerful once I realize Palm still holds 40% of its market, is trading at a 52 wk low, and is on the cusp of a new product roll-out. After an hour, I chuck the 10K and get to best part of my job: running through hundreds and hundreds of chart setups.
