Why I Like Brush Engineered Materials

The Dow Jones Industrial ended a 13-week (up-on-Friday) streak last week (using Thursday when Friday is a market holiday). Some pundits believe these up Fridays may have been caused by traders who expected buyout announcements over the weekend, but it may also be caused by short sellers getting flat before a weekend. I wonder if this Friday’s price drop may be a bad omen.

Brush Engineered Materials (BW) fell sharply last week when they announced lower second quarter guidance. I believe the sellers went overboard on this one, and purchased some BW shares on Friday. Here is why I like it:

1) Brush Engineered Materials is a global leader in high performance engineered materials and has a near monopoly in beryllium-based products.

2) Jeff Gendell (Tontine) is a large shareholder and purchased more BW shares on June 20 (450,000 shares at $41.57) and June 21 (35,900 shares at $40.38). It is often a good idea to purchase stocks bought by master investors, especially if you can buy them for less than they paid.

3) Jim Cramer briefly commented that the Brush selling has been overdone.

4) Matrix research just upgraded BW.

Full Disclosure: I am long shares of BW.

BW 1-yr chart: