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MilesJStoner's  Instablog

Send Message - My site - Elevated Member/Moderator I'm 29. I started trading when I was 18 (someone bought me a mutual fund) about a year later I wondered what had happened to it and I was told that it was still in my account and I just needed to log in to my account and... More
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  • VELT - High Emotional Trading Leads To Herd Mentality Sell-Off

    VELT just posted an earnings beat for this quarter, which was loss of .02c v. what analysts expected of a loss of .03. This is an eps beat. Also, they posted a beat on revenue at 51.8m v. 46.4m, beating by 5mil. Guidance for next quarter was slightly above in line at 55m - 59m v. 54.7m. Finally, guidance for the full year was in line: 283m - 296m versus estimates of 289.5m.

    Despite this e/r beat the stock sold off massively. Starting the day at 9.3 and selling down to 5.61 (lod), representing over 30% loss of stock value the same day they presented an e/r beat.

    You may wonder why they sold off? Great question! Many firms still have buy ratings on the stock, including Needham, which noted that "its cash balance fell 46% Q/Q, and thinks investors want to see an improvement in Velti's revenue collection." So they cut their cash reserves in half this quarter, but I think this presents a good case for the long and a reason as to why they most likely will beat Q2 and possibly FY guidance. They are using this money to beat on their upcoming e/r events.

    The money was used to upgrade many of their internet applications as they are a mobile marketing and advertising technology company that operates globally. So basically they enhanced their company, strengthening it from within.

    Another reason as to why the stock sold off is that the market it taking in this reignited Greece news negatively and thinks that Greece will default, but even if Greece defaults the money they owe the world only totals 455billion USD. Not really enough to effect the world even if they defaulted, but many think its will domino effect the Euro, which this argument has been presented before, last year and it was trumped by Germany's recent gpd growth, since they are calling the shots in Europe anyway.

    Today was your classic case of emotional trading, which leads to trends becoming highly blown out of proportion. Many did not know if this e/r news on VELT was positive or negative and just followed the trend of the market instead. When in reality this stock should have sold off, but not set new 52 week lows, at this point is oversold and should bounce back towards 7-8/per share.

    I am long VELT with a starter position at 6.22. I plan on building into this position so when all this fear and blood gets out of the water the stock will rebound.

    bottom line: e/r beats on all accounts should not sell a stock off to all time lows. No point in that, when you see logic astray you take the contrary position and wait to make you money.

    Disclosure: I am long VELT.

    Tags: F, VELT
    May 16 5:10 PM | Link | 1 Comment
  • CDTI: Possible pump job, by Roth, the underwriters, works, despite major Issues!!
     CDTI or clean diesel technologies, closed at 4.25 two days ago, in pre market this morning is was topping 7.6, a whopping 80% gain.

    Why you ask?

    They closed a share offering.

    A share offering is done by a company to raise money, in this case CDTI raised 10mil by adding 3mil more shares to its float.

    3mil shares at 10mil is $3.33 per share, now when you add 3 million shares to a float that is only around 1.5-2million then you are dilution current share holders by 

    150% share dillution !!!!!!!!
    Why would you dillute your share holders this much if it wasn't essential to the survival of your company? 

    You wouldn't, which means that CDTI is barely getting by with the business model they have now. 

    They have no positive cash flow!

    CDTI even acknowledges in their 10-Q that they doubt they will ever achieve positive cash flow.   
    "We have not experienced positive cash flow from our operations, and our ability to achieve positive cash flow from operations, or finance negative cash flow from operations, could depend on reductions in our operating costs, which may not be achievable, or from increased sales, which may not occur. "
    "We will need to have additional sources of funding in order to conduct our operations for any reasonable length of time, and no such funding is yet in place or committed, nor do we have any assurances of additional funding ." from auditor’s report for the year ended December 31, 2010 includes a “growing concern” explanatory paragraph.

    the majority of the tier 1 truck/engine companies (i.e. Cat, Cummins, Donaldson, etc.)  develop & manufacture their OWN  diesel emission products

    Their technology is nothing special. Tier 1 companies have similar technologies and are significantly more advanced than that of CDTI.  In addition, companies such as Caterpiller & Cummins have the vast resources needed for advanced R&D which is why they are developing new emissions technologies each

    Also, there seems to be a lot of confusion by investors and traders that  CDTI (Clean Diesel Technologies)  is in the same market as CLNE (Clean Energy Solutions)  WPRT , & other natural gas transportation companies.   In reality,  the market sector CDTI competes, diesel emissions,  is in direct competition to the LNG Renaissance that the US is currently experiencing and what CLNE WPRT, etc  are capitalizing on.   

    another great article outlining why this irrational 80% gain will soon envelop itself
    "For example, if 1M shares were issued at $7/share, shareholders would be diluted roughly 25% in exchange for enough cash to get Clean Diesel Technologies through the next two or three quarters. This would put tremendous pressure on management to grow the company at a rapid rate, only to justify the financing."

    Which brings me to my main point of Roth and their recent pump job.

    Roth was given a large amount of shares at 3.5 during the offering, they also are a market maker for CDTI, which in turn allows them to partially control the market and run the price up, I was spammed with tons of pr email from Roth pumping CDTI

    The kicker is that the day of the offering's ending, Roth upgrades CDTI to buy with a 9 target.

    Jul 13 12:17 PM | Link | Comment!
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