Why I'm Taking a Chance on Meridian
Every once in awhile I just break all of my rules. (And I usually regret it as well!)
I wanted to report on my latest indiscretion. Meridian (VIVO), a holding of mine, reported yesterday. Latest sales for the third quarter increased 11%. EPS came in at $0.19/share, down from $0.22/share, but last year included a tax benefit of $2.4 million. Taking this out it worked out to $0.19/share this year vs. $0.16/share a year ago.
Anyhow, the market has absolutely taken this stock apart.
Daring to go into the jaws of this awful negative momentum, I purchased 2,000 shares of VIVO yesterday afternoon at an average cost of $23.99/share. As I wrote this, VIVO had already slipped BELOW this price, and was trading at $23.81/share, down $4.93 or 17.15% on the day.
I think this is way overdone. I am trying to think rationally in the face of apparent market madness, which can be a recipe for failure for me. But I shall put my contrarian hat on, hold my nose, and keep you posted.
Disclosure: The author owns VIVO.
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This article has 4 comments:
Any drift down to $22.50 and I will be buying those ITM Jan-09. Last earnings it took a serious implosion only to consolidate and recover $3+. I give it about a month and we should be up %10. With ITM options a 10 % would = equal about an 80-100% move then you sell short calls against it. Great strategy if you call the direction right.
Freedland
No I am not a masochist. I now have unloaded 1500 of those 2000 shares at about an average gain of 1.5 points.
Trying to keep my hands off the last 500 for awhile.
Just lucky I guess. Sometimes it pays to swim against the tide. Usually I have to call a lifeguard to pull me out :).