Changing my mind on a dime?
Hi again everyone. I have been accused of changing my mind on BOFI on a dime. Here’s a mild defense:
I’ve been in BOFI for just under three years now. This is not short term trading. I took my initial position at $28. I’ve had plenty of chances to change my mind and didn’t. I added all the way up until about $60 or $70 as I remember. Then, 19 months ago, when BOFI hit $106 I trimmed a little, just because my position was getting too big.
Over the next several months it fell from $106 to $65. That’s a bunch!!! But there was no bad news or threat. (Very different that the current situation). I added a lot from $80 all the way down to $65. That was the FIRST CRASH I stayed in and didn’t change my mind. A slow-motion crash, but a crash non-the less.
It came back up to $133 by about 3 months ago. BOFI was now one of my biggest positions, if not my biggest. Then there was a short-seller attack. The price fell over a period of weeks to about $106 or so. I was a little worried and prudently reduced my exposure, but just by about a third.
Then they got approval for H&R Block and the CEO rebutted the short attack. I added back, on the way up, most of what I had sold at about the same price on the way down. Over a five week period the price went up to over $140. I trimmed a little at $134 and $139. That was TWO CRASHES I had stayed in for.
Then this week there was the lawsuit. The price went from $140 to $99 in a day. I stayed in. The CEO defended but sounded flakey and defensive and couldn’t answer some of the questions. I stayed in and made excuses for him (emotional strain, surprise, etc). The price bounced right back to $119 in a day. That’s THREE CRASHES I stayed in for. I thought it was over.
Then Friday, came the second NY Times article! The straw that broke the camel’s back.
Combined with the lawsuit, my discomfort about the CEO’s responses, and all the questions raised by the short-sellers (who are sometimes right, by the way), I decided I was too uncomfortable and that it wasn’t at all prudent for me to continue to take this risk. I figured another crash was coming during the day, and that a FOURTH CRASH was one too many. I started selling in the morning at $116 and ended up with an average exit price of roughly $110.
Now, if you are a newcomer to the board and think I was just quick to change my mind, you simply didn’t know any of the history.
I advise looking at a six-month daily graph of BOFI’s stock price. You can see a small sell-off from $97 to $88 in July (I added to my position there) followed by a rise to $135. Then from early August to the beginning of September, a big decline over a period of a month (the first short-seller attack), followed by a rise over five weeks to over $144. Then, this week, on Wednesday, on one day, a drop fro $143 or so to $99. That doesn’t look ANYTHING like what any of the other declines look like! In a single day it was much more of a drop than the entire first short-seller attack over four weeks. Then on Thursday, after the conference call, a rise, but less than half-way back, and on Friday, back down. This looks very scary to me, and I’m glad to be out. That doesn’t mean that I’m right, just that I feel a lot safer. When I look at that graph I think it could go Monday to $110, or to $80-$85. I don’t want to play that kind of roulette. JMO. If it goes back up to $110 or $120 I’ll be happy for those who had the courage to stay in, but to me it just doesn’t seem safe.
Saul