Because the P/E ratio is not accurate?? OR Because of past success of shorts to lower price? You heard the joke of the guy who kept buying and brought the price up to triple the price, making him feel rich, then starting selling to realize his profits, and merely brought the price right back where it started from. You don't think the shorts would love to cover at these prices? IMO, the stock will go right back up whether shorts are successful or fail: If they fail, they will bring it back up again; if they succeed and cover at low prices, by the time they are done, there is nobody sitting on the stock anymore.
It's because DRL is one big bull trap. A couple months ago, before it was mentioned here on ET, I almost invested heavily in DRL myself! The numbers looked great, it came way off the highs, etc... Fortunately, I figured out that the P/E you see is 100% fake. I think there are currently MANY retail investors who have loaded up long DRL, for the same reasons as you & hydroblunt bought it. These will be shaken out before DRL goes up. Short interest is only 15% of the float. Float= 91 million shares <b>Non</b>-institutional ownership= 24 mil Shares short= 13.5 mil. In other words, for every share held short, there are almost double as many shares held by retail longs. <img src=http://stockcharts.com/c-sc/sc?s=DRL&p=D&b=5&g=0&i=t33966138439&r=7392> That chart is UGLY. It couldn't bounce much with the rest of the market, so now: Down it goes... Disclaimer: I specialize in <b>intraday</b> trading. Calling stocks on a longer time frame is NOT my biggest strength. Not at all.
Registered your comments. My opinion is as follows: There are 165 instititutions holding DRL long and accounting for 74% of the shares between inst. and mutual funds (including a large holding of insiders and 5% holders plus of 17%). I don't think they are all stupid. It's my understanding that the shorts are primarily from one hedge fund who is good at what they do, and have already done the maximum or about the maximum possible given the news. The next available news is 9:1 IMO items being fixed up. IMO there is a theoretical limit to how much they can manipulate down a stock that is making money before: a) the institutional buyers take them out, b) a buy-out offer for DRL occurs.
FYI: The implications of IFN's recent rights offering just hit me. I'm <b>withdrawing</b> my buy recommendation, as the 28% premium over NAV could take a big hit when the rights expire next month.
I still hold highly of DRL albeit it has been a painful experience thusfar. See the following posting: Re: Why DRL? by: drugsman12 07/09/06 08:34 pm Msg: 50622 of 50644 I don't know if DRL will skyrocket. But am confident it can trade to $8-10 over next 12 months. That is a nice return at current price. IMHO DRL will likely trade $8 before $4.75. So risk reward is ok. Long term earnings power of a bank with DRL's equity, branches, deposits, ect. is easy to estimate and supports a much higher share price using industry standard multiples. Banking is a consistent industry and DRL managed properly can be a decent business. DRL will finish 2006 higher than current price i think buy 33%. I'm not delusional about stock getting back to $16 or even $13. But $9-$10 is doable at any time.
FYI - from Caribbean Business by: kadwatha Long-Term Sentiment: Strong Buy 07/08/06 02:16 pm Msg: 50611 of 50644 Looking at market trends, Benabe noted the evolution of the commercial banking market over the past five years. In 2001, it was essentially a one-player market with BPPRâs 71% brand awareness overshadowing the rest. The nearest competitor was Doral Bank with 16%, followed by FirstBank, 12% and R-G Premier Bank, 13%. In the 2006 survey, BPPR still holds the lead (74%), but Doral garnered 38%, FirstBank 29% and R-G Premier, 28%. Benabe credits awareness gains to a complete communications strategy including aggressive and focused advertising. Distribution and quality of service also play a part. Both Doral and R-G, big mortgage lenders, already have a relationship with the market which makes it less difficult to cross-sell other financial services, he said. âSo when they decided to go into commercial banking they already had a databank of clients.â As for mortgage companies, Doral Mortgage was No. 1 in brand awareness five years ago, and remains the leader. Although in the past year the company received a large measure of unwanted publicity, during the five-year period, the company increased its score by 19 percentage points to 54%. Popular Mortgage, part of the islandâs largest financial services company, increased its awareness factor by 10 percentage points to 44%, and is tied with R-G Mortgage for second place. Popular has not been able to beat Doral and R-G because they were the first to establish their brands, Benabe explained. Popular Mortgage used to be just another financial service within the bank. âNow, it has its own brand name that enhances the quality of presence of the mortgage product,â he said.