Small-caps BARE, OREX and GMCR up around 40% today
News that Chrysler will be filing bankruptcy is causing stocks to seesaw through Thursday afternoon.
At 2:35 pm ET, the Russell 2000 (NYSE:IWM) is up 0.28%, while the Dow is up 0.25% and the S&P 500 is up 0.32%.
Small caps flying high today include Bare Escentuals (Nasdq:BARE), up 42% after its Q1 results topped the Street’s view. Also higher are Orexigen Therapeutics (Nasdaq:OREX), up 44% on heavy volume, and Green Mountain Coffee Roasters (Nasdaq:GMCR), up 37% after the small cap boosted its FY sales and EPS view.
On the downside, Build-A-Bear Workshop, Inc. (NYSE:BBW) is 20% lower today after posting a Q1 loss, and small-cap Oshkosh Corporation (NYSE:OSK) has falledn 19% after projecting a loss for 2009 and suspending its dividend.
******Bank of America (NYSE:BAC) shareholders voted to remove Ken Lewis as chairman of the board. But he remains CEO, at least for a little while. As much as I railed against Lewis, I must acknowledge that he is a something of a victim.
Now, don’t get me wrong. I have no sympathy for the CEOs who over-leveraged and mismanaged their companies during Wall Street’s greed bonanza. And Lewis was right there with the rest of them.
But when it comes to the Merrill Lynch acquisition and the surrounding events, it’s pretty clear that Fed Chief Ben Bernanke and former Treasury Secretary Paulson hung him out to dry. In other words, I believe Lewis’ assertion that Bernanke and Paulson strong-armed him into the Merrill acquisition and encouraged him to keep his mouth shut about Merrill’s $15 billion fourth-quarter loss.
The one question – and this gets right to the heart of the matter – is why did Lewis play ball? He had to know that his shareholders would be irate. And that’s the point – CEOs ultimately work for their shareholders. And bank CEOs for the most part forgot or conveniently ignored where their responsibilities lay.
*****I’m sure glad I recommended dumping Hovnanian (NYSE:HOV) for 30% gains right before it ran to $3, as I predicted. Forgive the sarcasm, but perhaps the most difficult aspect of investing is holding on to your expectations in an uncertain market.
You may recall when Hovnanian broke out above previously identified resistance at $2, I said $3 was coming soon. But then, I bit on Hovnanian’s head-fake move below $2, thinking the earlier breakout was a false one. Nope.
I’m not going to make the same mistake with Graham Corp (AMEX:GHM).
*****The most recent feature recommendation SmallCapInvestor Pro is a shipping company that’s making strong moves higher as the global economy recovers. The company is up 11% today on strong earnings, and SmallCapInvestor Pro readers are up 36% on this stock overall.
Shipping stocks are a very good gauge for the global economy because there’s not much room for these companies to improve their earnings through cost-cutting – they are either leasing ships or they are not.
Going forward, shipping stocks will track the global economy. If the recovery continues, there is a lot of upside. For more on my top shipping selections, click here.
*****Chrysler is headed for bankruptcy. While I’m sure there are other companies that we’d like to see in bankruptcy court (like AIG or Citigroup), there are issues with Chrysler that make bankruptcy inevitable.
First and foremost, there’s the fact that its debt-holders are unwilling to deal. Chrysler can’t make its interest payments without concessions, and that pretty much seals its fate.
*****I saw a brief note that the S&P 500 is concluding its best month since March of 2000. The high that month was 1,552. March of 2000, that was the year that the tech bubble started to implode. It took the S&P 500 seven years to get back to that level. On Oct. 11, 2007, the S&P 500 hit an intra-day high of 1,576.
About the Author
Ian Wyatt is a co-founder and President of Business Financial Publishing and the Chief Investment Strategist and Publisher of SmallCapInvestor.com and SmallCapInvestor.com PRO.
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