24/7 Wall St. » REDF

Revenge of the Cult Stocks (SIRI, MCP, REE, AVL, LVLT, SLV, ZSL, YRCW, BIDU, LOCM, REDF, SIFY)

Administrator — Tue, 03 May 2011 18:14:24 +0000

There is a common belief of the skeptics that the market is designed to cause the most financial pain possible, and the moves in cult stocks can be more painful than most investors can withstand. There have been some very surprising moves in the world of cult stocks today. The most surprising move today has been seen in SIRIUS XM Radio Inc. (NASDAQ: SIRI), which feels like true revenge after having grown cautious at $2.00. The rare earth bubble continues with big surprising moves in the cult stocks of Molycorp, Inc. (NYSE: MCP), Rare Element Resources Ltd. (AMEX: REE), and Avalon Rare Metals Inc. (AMEX: AVL). Level 3 Communications, Inc. (NASDAQ: LVLT) is another surprising move. Silver is living up to the Devil’s Metal all over again as silver via iShares Silver Trust (NYSE: SLV) and the inverse by the ProShares UltraShort Silver (NYSE: ZSL) is making and breaking some speculators.

YRC Worldwide, Inc. (NASDAQ: YRCW) is living up to a death sentence and Baidu Inc. (NASDAQ: BIDU) is showing how fast the Chindia growth trade can die. Lastly, we are seeing these death trades in Groupon-like shares of Local.com Corporation (NASDAQ: LOCM), Rediff.com India Limited (NASDAQ: REDF), and in Sify Technologies Limited (NASDAQ: SIFY).

SIRUS XM Radio Inc. (NASDAQ: SIRI) is now up 8% at $2.075 today and shares hit a new 52-week high of $2.09. We have even seen about 175 million shares trade with more than two and a half hours until the close. We noted some slowing growth headwinds, but Gabelli maintaining its BUY stance may be the culprit for today’s rally. We had been very bullish after this one was battered into a penny stock and then we remained bullish as the fundamentals got better and better. Our view changed, however, as the stock approached $2.00 and frankly, today’s move seems baffling. We have said a new breed of shareholders would be needed to run this higher, and it seems that is what is happening despite caution from us and others about its value.

The ‘rare-earths’ is another sector we have been watching in bubble-land. That call was holding true as the stocks started petering out in mid-March. As we cautioned, no one knows how much bubbles can inflate… Now we have Molycorp, Inc. (NYSE: MCP) up yet another 8.4% at $77.59. We heard that Dahlman Rose gave a BUY rating with a $125 target. Rare Element Resources Ltd. (AMEX: REE) is up 1.2% at $14.02 and Avalon Rare Metals Inc. (AMEX: AVL) is up 2.8% at $9.08, and both of these rare-earth outfits were started with BUY ratings at Dahlman Rose. Be advised, some extra volatility may be coming Wednesday as CNBC is going to highlight the best companies in the rare-earth sector.

Level 3 Communications, Inc. (NASDAQ: LVLT) is one that seems like a sleeper considering that its revenue rose and that its loss was narrower than expected. This has a whole new host of shareholders to accommodate now that it is acquiring Global Crossing Ltd. (NASDAQ: GLBC). Level 3 shares were at $1.44 before the deal was announced, then they jumped to $1.70. The high print was $1.84 and the high close since has been $1.73. Shares today are up about 1.2% at $1.66 and volume is 27 million shares.

The Devil’s Metal is living up to its name… iShares Silver Trust (NYSE: SLV) was not supposed to be a cult stock but the speculative trading volume has been so massive in this ETF that it has become the biggest trading vehicle on Wall Street. The Silver ETF is down by another 4.6% at $40.86 after the margin requirements have been changed. This was above $48 just late last week. To show how shocking the move has been, the ProShares UltraShort Silver (NYSE: ZSL) is up 9.2% at $17.38 versus $13.64 just on Friday.

YRC Worldwide, Inc. (NASDAQ: YRCW) continues to be the re-implosion, all over again. This is on continued news that the restructuring is only going to leave common holders with about 2.5% of the company after the company restructures with creditors, the Teamsters, and debtholders this summer. But wait, there’s more… YRC also noted further dilution is possible. Shares are down over 13% at $1.31 and the trading pattern went as follows: $2.06 on Thursday, $1.98 on Friday, and then $1.51 on Monday… to the $1.31 today.

Baidu, Inc. (NASDAQ: BIDU) is taking it on the chin from “The Chindia Slowdown” trade. This ADR is down almost 5% at $140.26 after having just hit a high of $156.04 on last Thursday. There are two “Groupon Alternatives getting whacked today. Local.com Corporation (NASDAQ: LOCM) is down 16% at $3.74 on more than 2.7 million shares (about 4-times normal volume) after earnings were treated as a disappointment. Rediff.com India Limited (NASDAQ: REDF) is another one touted as the ‘Groupon of India.’ It is getting crushed after Sify Technologies Limited (NASDAQ: SIFY) earnings have SIFY shares down 14% at $5.82. Rediff shares are down 10% at $12.79 on about 2.2 million shares. Rediff was almost challenging $18 just a week ago.

JON C. OGG

Filed under: Cult Stock, Trading Alert Tagged: AVL, BIDU, LOCM, LVLT, MCP, REDF, REE, SIFY, SIRI, SLV, YRCW, ZSL

IPO Rethink… Groupon Faces Mountains of Competition (GOOG, TZOO, KNOT, AMZN, OPEN, RLOC, REDF, LOCM, SPMD, WMT)

Administrator — Fri, 29 Apr 2011 20:08:37 +0000

Groupon is supposed to be one of the 24/7 Wall Street Top 17 IPOs to Watch in 2011. That hasn’t changed, but our skepticism is growing at the same time that internet valuations for these emerging social web companies is ballooning. Our biggest concern regarding Groupon is that there are literally no barriers to entry. We wanted to feature just some of the large companies which matter, along with some of the smaller public companies which may be able to give Groupon a run for the money.

First and foremost, Google Inc. (NASDAQ: GOOG) tried to acquire the company but the $6 billion or so offer was said to undervalue the company and no deal was reached. With recent values being put in the $20 to $25 billion, we just do not expect Google to stay hidden.

Travelzoo Inc. (NASDAQ: TZOO) may have been pounded this week as the stock went from over $100 to under $85.00 this week alone. What has helped to drive shares before that was the growth of its LocalDeals unit. This was a $66.00 stock at the end of March.

The Knot, Inc. (NASDAQ: KNOT) may have been given a small William boost (or is it really a Kate Middleton boost?), but it has also been migrating for some time to more local deals.

Amazon.com Inc. (NASDAQ: AMZN) did a coupon offer of its own through LivingSocial, which it reportedly invested $175 million in December. As large as Amazon is, there is no way in hell that Groupon was going to be allowed to not run into the beast of online retail.

Facebook has also jumped on the bandwagon here with deals in a limited city launch of local discounts through prepaid vouchers. How this ultimately plays out is something we are not certain yet, but one thing is for sure… Those Facebook loyalists would let Mark Zuckerberg put a Facebook logo on their front doors if he’d think about offering it. OpenTable, Inc. (NASDAQ: OPEN) is up over $110.00 again ahead of next week’s earnings and it has a deal with Facebook.

ReachLocal, Inc. (NASDAQ: RLOC), a fairly recent IPO, saw its shares surge 30% at one point this week after earnings and after it reported a partnership with Google. Google may have wanted it more for its four key international market presence, but it will be a partner in the search engine’s AdWords system.

Rediff.com India Ltd. (NASDAQ: REDF) has magically resurfaced after having been mostly forgotten by most investors. The India website has seen its stock effectively triple in just the last 45 days. The company’s announcement on April 26 that it was launching a “group deals service” in 40 Indian cities called “Rediff Deal Ho Jaye!” has driven shares further. Last Friday this was a $11.25 stock, but now shares are up around $16.25 and its market cap is about $455 million.

Local.com (NASDAQ: LOCM) was given some attention in December when the Groupon deal was running shares. It has since had an earnings warning and the shares are still under $5.00 now after having risen to over $6.00 in December. Another winner at the time was SuperMedia Inc. (NASDAQ: SPMD), which has SuperYellowPages, had doubled at one point in the last weeks of 2010 to over $9.00 but its shares are back down close to $5.00 again. Both of these were featured by many as “alternatives” that could grow in this space.

Even Wal-Mart Stores Inc. (NASDAQ: WMT) has gotten into the game when it acquired Kosmix for social and mobile commerce initiatives.

Before you think that Groupon is dead, it isn’t. It still has loyalists and it is still going to grow whether we have some caution or not. That doesn’t mean that its valuation will not come under fire. It also does not mean that Groupon is automatically assured a successful life indefinitely.

There is literally no barrier to entry for any company with enough reach to compete with Groupon. Can Groupon claim that it invented coupons? Can it claim that it is the only social networking play out there? Can Groupon even claim that it invented online coupons? The answer is no.

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JON C. OGG

Filed under: Consumer Goods, Internet, IPOs, Retail Tagged: AMZN, GOOG, KNOT, LOCM, OPEN, REDF, RLOC, SPMD, TZOO, WMT

India Election Winners By ETF & Shares (PIN, EPI, IIF, IFN, INP, INFY, IBN, REDF, SAY, SLT, TTM, WIT)

247wallst — Mon, 18 May 2009 13:19:05 +0000

It is rare that you see an election have this large of an impact, but the Indian stock market surged on the new election results. The Congress Party won a decisive victory in India and this sent Indian stocks up 17% on average. The move was so large that the Bombay Stock Exchange had to close after already seeing one halt. This had a huge impact on stocks, which you can see reflected in the share prices in the high pre-market indications of the major ETF’s, closed-end funds, and active ADR’s listed below.

ETF’s and closed end fund gainers representing India are as follows:

PowerShares India (NYSE: PIN) up 15% at $17.00 at 9:07
WisdomTree India Earnings (NYSE: EPI) up 23% at $17.20 at 9:07
Morgan Stanley India Investment Fund, Inc. (NYSE: IIF) up 17% at $18.85 at 9:07
India Fund, Inc. (NYSE: IFN) up 20% at $25.93 at 9:07
iPath MSCI India Index ETN (NYSE: INP) up 23% at $48.75 at 9:08

The key Indian ADR shares are as follows:

Infosys Technologies Ltd. (NASDAQ: INFY) up 13% at $36.35 at 9:09
ICICI Bank (NYSE: IBN) up 31% at $23.39 at 9:09
Rediff.com India Ltd. (NASDAQ: REDF) up 32% at $3.30 at 9:09
Satyam Computer Services (NYSE: SAY) up 13% at $2.05 at 9:09
Sterlite Industries (NYSE: SLT) up 19% at $10.98 at 9:10
Tata Motors (NYSE: TTM) up 13% at $8.59 at 9:10
Wipro Ltd. (NYSE: WIT) up 9% at $11.65 at 9:10

This election is expected to allow the government to have a greater degree of flexibility to boost economic reform and growth. The prior communist parties had not been favorable for issues such as insurance, privatizations, and pensions.

JON C. OGG

Posted in ADR, Emerging Markets, ETF, Index, Mutual Funds, Politics, Trading Alert Tagged: EPI, IBN, IFN, IIF, INFY, INP, PIN, REDF, SAY SLT, TTM, WIT

Indian ADR’s Unphased By Terror Attacks (INFY, IBN, REDF, SAY, SLT, TTM, WIT)

247wallst — Wed, 26 Nov 2008 15:17:19 +0000

Fresh attacks that appear to be targeted against foreigners in Mumbai, India have failed to thwart a market rally today even in Indian stocks. Reports have foreigners being taken hostage at premiere hotels frequented by the wealthy and by business travelers and some 60 deaths have been reported. Interestingly enough, this has also failed to take out the wind of the Indian ETF’s and Indian ADR’s which are actively traded here in the US. Stock Moves in ADR’s:

Infosys Technologies Ltd. (NASDAQ: INFY) up 6.3% at $24.61
ICICI Bank (NYSE: IBN) down 2.7% at $13.26 (had been up before)
Rediff.com India Ltd. (NASDAQ: REDF) up 5.6% at $2.06
Satyam Computer Services (NYSE: SAY) up over 3% at $12.78
Sterlite Industries (NYSE: SLT) up 7% at $4.80
Tata Motors (NYSE: TTM) down 2.3% at $4.59 (was down most of day)
Wipro Ltd. (NYSE: WIT) up 4.3% at $7.48

We also added in an after-report list to the ETF’s and closed-end funds we track to show a broad interest as well.

Jon C. Ogg
November 26, 2008

Posted in ADR, Emerging Markets Tagged: IBN, INFY, REDF, SAY, SLT, TTM, WIT

Are Google (GOOG) And Yahoo! (YHOO) Buying Into India?

247wallst — Mon, 16 Jul 2007 04:14:38 +0000

The Hindustan Times is reporting that Yahoo! (YHOO) and Google (GOOG) may be making bids for Indian web portal Rediff (REDF). The price would be as high as $1 billion. The news comes at the same time that Barron’s warns that the price of Indian net companies may becoming much too high. The magazine says that Rediff’s market cap is 13X the size of the entire online ad market in the country.

But, Google and Yahoo! may feel that they cannot afford to make the same mistake that they did in China where market leader Baidu (BIDU) has taken a significant lead, especially in the search area. Both of the US companies have tried to take share from Baidu, but without any success.

As in other bidding for new business, Google has the advantage that its earnings are less likely to be diluted because they are so much larger than Yahoo!’s. Also Google has more "capital" with a market cap of $172 billion compared to Yahoo! at $36 billion.

No one should be surprised it Google buy Rediff. It makes too much sense.

Douglas A. McIntyre