I think a better strategy for trading this one is too place your stop at the low of $2.95. I don't see any reason to hold the trade if it breaks through this point. History has shown that when it breaks through the point, (i.e. $6, $5, $4, that the stock tends to head south very quickly. If history should repeat itself, the the stock could easily head down to $2. ) A closer look at this strategy reveals it would have cost you .10 per share at $5, you would have been stopped out of the stock 7 times at $4. Costing you a total of $.49, (assumming commissions of .01 per share, and that you would have declined to take partial profits at a .20 profit), and 1 time at $3, costing you .07 per share traded. At each point, this strategy got you out of a bad trade , preserved your capital, and gave you a defined plan to get back in so that you won't miss the move if and when it happens.
mike- whats up?? i see you are nerding around on this site too....of course, you know who has got the ACF on for 6K......just trying to see if some of these "traders" had anything worthwile to say on this stock...yeah, i will sell it around 2.95 i'm thinking....
If you don't read herb greenberg or any of the other guys on TSCM, you should save some of your 18k and buy a subscription. I have been short ACF off and on for over a year, and have made quite a bit of money on ACF puts. You should ignore the balance sheet. That means nothing. Even ignore charge off rates. They are keeping charge off low by not allowing the loan portfolio to really season b/c they keep increasing the pool. I think that their residuals are really poor currently, and the situation really seems to be snowballing. IT would not surprise me if they have trouble securitizing the next batch of loans, or if they do, they're at really awful rates. I covered the last of mine on that secondary around september. I thought that they would get some more liquidity and a fighting chance (though at an awful price dilution wise). After reading their last earnings though, I am considering shorting again. This stock is terminal. For the time being, I have shorted a pretty large slug of COF from around 38. I think it's a good proxy for ACF and all the consumer loan troubles/irregularities. I don't like shorting 3 dollar stocks just b/c of the snapper rallies that sometimes can happen on good news. I covered most of my cof at 32.5, but I'm looking to put it out again on any rally that the market faces. I don't think that the loan troubles have really started to take hold in the way that they soon will. This goes for HDI and S as well. (Disclosure, I have HDI puts)
One last thing, ACF isn't a liquidity situation like OMG. OMG was just a bad pricing for one quarter for a basic commodity and that was mainly b/c a government order was defered I believe. As you can see, cobalt pricing has firmed a lot since then, and the stock has recovered nicely.
Ryan, I haven't held this stock for a while so I don't know the fundys for it at this exact moment. However, I did have it in my investment account for many of the reasons you mentioned and still lost $$. The problem with the asset-backeds is the economy. Beating the dead horse, but until there's a recovery, the subprime lenders like ACF are on the front line waiting to get shot. With the charge-offs the banks are starting to report, you can't help but wonder if the more 'liberal' lenders like ACF are in even worse trouble. When I held the stock, Greenberg or whatever his name is, from Street.com kept pounding on the stock and the shorts were piling on. I was pissed, but couldn't take the pain and got out. I have no idea if he's still doing this today but I can say I'm glad I got out when I did. Personally, I lost the most money investing in bottom-fishing plays like ACF so all my stock investments are now in companies doing well in spite of the economy. All this is if you're looking at ACF as an investment. Of course none of what you or I said means a damn thing if you're talking about a short term trade.
Always avoid subprime lenders like the plague. They blow up in good times and bad with little warning.
i think phil's point was intended to illustrate something and not yank your chain.... isnt your stock in consumer credit company?.... try this link and check things out... http://www.prudentbear.com/archive_...gory=Credit+Bubble+Bulletin&content_idx=19587 you may not want to read the whole thing, so here is a blurb on your little jewel from the link posted above... if you read through the other articles, you'll see some startling subprime home mortage default/foreclosure rates in certain states... "Over at AmeriCredit, things are quickly going from bad to much worse. The company reported a $27.6 million loss, quite a deterioration from the previous quarterâs $70 million profit. Combined delinquencies and foreclosures rose to 14.7% of managed receivables, up from the third quarterâs 12.2%. Total dollars delinquent actually rose about 24% during the quarter, while Total Charge-offs jumped 15% to $236.6 million. Year-over-year, charge-offs were up 82%. The fact that the company continues to lend aggressively and grow receivables makes the rapid Credit deterioration all the more alarming. Year-over-year, managed receivables were up 36% to $16.2 billion. Receivable growth has slowed, however, with the past quarterâs 2.9% (11.6% annualized) down sharply from the previous quarterâs 6.7% (26.8% annualized). Slowing growth is today's kiss of death for subprimie lending."
While these two seem to have thier risks ACF and COF, doesn't the high number of insider transactions and high short interest mean anything?