DRL: seems to me an amazing buying oppty

Discussion in 'Stocks' started by Option Trader, Apr 27, 2006.

  1. This thread comes in the wake of the thread I had started a couple of weeks ago about picking no losing stocks:

    See DRL the last time it dipped to this low price. I bought at that time, and it came right back up a few points. Now the shorts have manipulated it down again to a rock-bottom price; this occurred in the wake of the company cutting the common stock dividend (not the preferred dividend) to strengthen its cash position; there was IMO an amazing over-reaction, esp. since it was already at the bottom of its trading range.

    Also, see the following link: http://www.stockconsultant.com/consultnow/basicplus.cgi?symbol=drl#ttop

    Perhaps the large $10 May put position was taken by the shorts which has given them the determination to continue till now.
  2. mizer


  3. Brean Murray seems to have downgraded DRL from accumulate to hold.

    I think their input is almost worthless. Note the following two observations:

    1. Thursday: Note 3 large volume trades (2 at 200,000 shs and 1 at 400,000 shs) that supported the price
    around the 8.10 price.

    2. Friday: Look at the gigantic volume of calls purchased on Friday, way out of proportion to the normal, for May, and for Jan 2008, which seemingly is either shorts trying to cover themselves, or a big institution about to buy heavy, and buying options right before.
  4. Chagi


    Hmmmmm, interesting stock, but I'm not sure that I would want to touch it. The very low P/E ratio caught my eye, so I started going back through news items for the company, and "accounting restatement" jumped out at me...

    Regarding the May 2006 $5 call options, I'm showing open interest of 89 and volume of 8021. I forget if reported open interested lags by one day with options, but if it does not, wouldn't that mean that a large number of call options were closed out on Friday?
  5. There were issues, but IMO, the shorts REALLY overdid it.
  6. DRL came out with an excellent report showing they are still making good money with a one time accounting write-off, and shorts still manipulated it down today. I have added to my collection.
  7. Since I posted the last message, the stock went up about $.30, about a 4% increase.
    It closed $.44 higher than the low of the day after the manipulation, or about a 6% increase.
  8. StasDesy


    It looks like a reversal right now.
    What do you have to say about its debt/equity of 4.5 ?
  9. Yes, after a big down moverment, a price reversal is extremely bullish. The shorts now are very worried--you should have seen them during the reversal trying to hold the price back by flashing a big ask, but they couldn't hold it back, nor could they afford to short more stock with a change in the trend.

    About the debt/equity: Banks go even 10:1. What is needed is quality assets which is what DRL has.
  10. LOL I actually just sent you a PM, Option Trader, before reading ur posts.

    Today definitely seemed like a reversal day. I'm fully loaded but I will be looking to get into DRL in the next few days, depending on how it behaves around $8. But that crazy reverse is definitely a sign.
    #10     May 3, 2006