3SOF

Here's a copy of today's update on SIFY:

«We had a great rally yesterday on SIFY but then the general market tone took it down by the end of the session. Everything seems to be fine with SIFY's fundamentals, the company has great potential. But there's the general market risk.

I want to continue holding SIFY but protect myself from the general market risk in a clever way. On past updates I said the following:

QuoteI remember that when I was looking at SIFY I also read some things about REDF and thought it was incredibly expensive. Perhaps it would be a good hedge, long SIFY and short REDF. But I'm a bit afraid the stock opens with a big gap down today (on my news feeder the earnings news is right - but since these companies don't file the 10-Q report with the SEC, an erroneous press release may induce many people in error).

Since this update, SIFY went up 12.4% and REDF declined  8%.

Looking at the fundamentals of both companies, I believe this

1) If the market goes down REDF will go down much more than SIFY;
2) If the market goes up SIFY will rise much more than REDF;
3) If current trends continue, SIFY will go up and REDF will go down, making this hedge profitable in both ways.

So, I'll continue holding SIFY and will protect this investment selling REDF short.»

Therefore I'll sell REDF short around today's open, 6.66% of the 3 Stocks on Fire Portfolio as always. I don't know if the stock has an option chain, I lost the link for that info, can someone please provide it? Thanks.

Over the next updates I'll explain why REDF is a good hedge for SIFY, but you can start by comparing market cap, sales volume and earnings growth for the two companies and you will see it immediately.

Great analysis David(applause). Im new to the wolf wave pattern that was recently introduced to many of us here at 3sof by calven. But REDF's price action looks to be forming a wolf wave in your favor ;)

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=12010;image)

Good luck on your trade.

-fousc

I did not find options through a quote from fidelity. 

Are you saying you think REDF gaps down today, or is that an out dated opinion?

Quote from: SmartWrasse on December 20, 2005, 08:55:04 AM
I did not find options through a quote from fidelity. 

Are you saying you think REDF gaps down today, or is that an out dated opinion?

It is an outdated opinion, the stock will probably open near yesterday's closing levels. That is an opinion from December the 14th, I believe, after a press release saying there was an error in REDF's EPS, you can find it on SIFY's thread.

From their latest earnings report, I see that REDF has 25,798,319 shares outstanding. That means the current market cap is 25,798,319*$19 = $490,168,061.

SIFY's market cap is 44,800,000 shares outstanding on a fully diluted basis times $10.67 = $478M.

SIFY's revenues for 2006 are expected to be higher than $100M.

REDF's revenues expected for 2006 are about $18M.

This is just a start, on further updates I'll show more evidence that REDF is way overvalued.

David, is it possible that SIFY's success is hauling REDF? I understand your argument, but do you have an upper limit for REDF, beyond which you'll pronounce it a rotten deal?

QuoteDavid, is it possible that SIFY's success is hauling REDF?

Absolutely. SIFY's rise brings attention to India and that makes REDF go up in sympathy.

QuoteI understand your argument, but do you have an upper limit for REDF, beyond which you'll pronounce it a rotten deal?

Don't forget REDF was down a lot a few days ago, so I think of the recent days as a small correction. I don't think REDF will ever close above $19.90 again (at least not in the near or medium term). If it does, we'll talk again ... also, if one day SIFY goes down 1%, I expect REDF to go down 3 to 5%.

REDF has a superior market cap than SIFY. REDF has $8.8M in cash, SIFY has $26M. Growth is about the same.

Anyway, I'm not looking to make a great trade on REDF, I'm just looking to lower the risk on SIFY's trade. I may not make as much money as if I risk it all, but if it wasn't this way maybe I would have taken profits on SIFY already, instead of letting them grow as they are.

I feel so comfortable with these two twin trades (Long SIFY, Short REDF) that I'm actually thinking of repeating this procedure more times, long a strong stock and short a weak competitor as an hedge.

I'm still asking myself if this was the reason REDF rose so much in the past:

«Correction: Earns-Rediff.com Story
Tuesday December 13, 5:48 pm ET

MENLO PARK, Calif. (AP) -- In an Oct. 24 story about Rediff.com India Ltd.'s second quarter earnings, The Associated Press erroneously reported that the company earned $1.16 per American depositary share in the period. Instead, the company earned 1.16 cents per ADS, or 1 cent after rounding.»

I don't think so, but ... the stock is so overvalued that it makes me wonder.

People on Yahoo! Boards are starting to compare both companies and asking why REDF doesn't follow SIFY with as much energy:

REDF Yahoo Boardhttp://messages.yahoo.com/bbs?.mm=FN&action=l&board=1600905325&tid=redf&sid=1600905325&mid=13430 (//http://)

I think it is just a matter of time before everybody else perceives the short opportunity on REDF, not long.

I'll continue holding REDF short.

Can't borrow shares to short this.  Whatever happened to naked shorting?  I thought that was standard procedure.

I was never able to get shares from fido either  (http://mdteague.com/slap.gif)

Hi folks,

I would NOT short this stock!  It has a special "cult" following & special status in the email world.

IIJI should ( I believe ) be getting ready to challange old highs...could break thru them this time, IMO!

willey

Quote from: netfishmademerich on December 23, 2005, 11:15:52 AM
Can't borrow shares to short this. Whatever happened to naked shorting? I thought that was standard procedure.

Quote from: SmartWrasse on December 23, 2005, 12:21:26 PM
I was never able to get shares from fido either (http://mdteague.com/slap.gif)

It is a pity you guys can't short REDF. The more I see of it the more I get to the conclusion that this is one of the most overvalued companies you can find on the entire US market.

REDF's market cap is $497M and last year's revenues were just $12M. There's no ascending revenue trend, just an erratic chart, as you can see below:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=12361;image)

The Price to Sales Ratio is about 29 and the industry's P/S Ratio is 3.25.

Here's a comparison between REDF and some competitors:

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=12362;image)

I'll continue holding REDF short (despite I will close SIFY's long position around today's open).

REDF short started as a long SIFY hedge, so, since I don't hold SIFY long anymore, it is right to close the REDF short trade too, right? Wrong, things evolve.

REDF short is exactly the kind of trade that I want to do at this point. I want to be a bear in the overall market and REDF is an overvalued stock due for a steep decline.

But I don't want to be long term bear trader, I need to be an active bear.

An active bear holds is shorts for as long as the stock is declining in trend terms. I define trend by the descending trend line on the chart below (the red one).

I'll continue holding REDF short for as long as the stock is set to close below the red descending trendline, which for today stands at $19.52.

REDF is acting as expected, that is, going down. If the stock breaks $18.02 on a closing basis we get further confirmation that this trade is right.

I'll continue holding REDF short for as long as the stock is set to close below the red descending trendline on the chart, which for today stands at $19.30.

Probably I'll add an oversold/overbought indicator to get out of this short trade if there's a big and sudden break, but this isn't the time, yet, to think about it.

Hi David,

If your short doesn't work out ( my belief ) a measured move in REDF works out to $23 to $25, short term - but what do I know?

Hidden hands are behind this one, I believe

good fortune to all...

willey

Quote from: willey on December 29, 2005, 11:34:00 AM
Hi David,

If your short doesn't work out ( my belief ) a measured move in REDF works out to $23 to $25, short term - but what do I know?

Hidden hands are behind this one, I believe

good fortune to all...

willey

Hello willey, I don't know what you know, because you're not telling  :)

Why do you think REDF will rise? I see a company with a sky rocketing price to sales ratio and not all that much revenue growth.

Anyway, I have a 4.59% profit on this short position and I intend to let the profits run.

If the general market tanks as I expect REDF will go down not less than 50% from current levels in 6 months time.

What I see REDF:

Still in uptrend with higher lows and higher highs.

Today was at least short term bounce from 50-day as it has done many times so expcted - the MACD though still is weak thugh as long as it stays aboe the 50-day it is still ok.

(http://xs62.xs.to/pics/06012/redf00301.jpg)

Hi folks,

I would NOT short REDF or IIJI...these stocks have their own internals not shown on TA.

These stocks will respond to GOOG's direction ( the euphoria over selected internets, including YHOO )

GOOG's setting up to blast off higher, IMO

the Dow's setting up to blow thru 11,000 this month

all JMHO, of course...do the necessary DD!

willey ( the golds are gonna SHINE!!!!!!!! )

I'm also confused on this trade. I thought we were using 19.30 as the trendline on Dec 29th. With that trendline coming in at about 19.08 it looks to me as though this trade should have been covered on the close. If not are we looking at 19.30 or 19.90?

Hi again, David,

<<Hello willey, I don't know what you know, because you're not telling >>.....

Actually you do know what I know ( I have no inside knowledge here ).  You just look at the data differently!  You don't see the sector play setting up, apparently.  You don't see the REDF significance in the Indian community.  You don't see the "relative insignificance" of the SIFY in the Indian community.

all JMHO, of course...

Good fortune to all ( shorts or longs )

willey

One short candidate: NFLX

After strong bullish runs, the stock gained 300% from $10 to $30, then its price moved on lower highs. I would like to short it on strength.

It is down two days in row even on market rally yesterday.

NFLX is an excellent choice Shawfund, but both Scottrade and Schwab have it as unavailable.

Any suggestions?

You want a good short: FITB.

This bank is in trouble, with squeezing margins, bankruptcies and top management resignations, including the CFO. You want more signs that a compnay is going down than the CFO resigning? Their 4th quarter is going to come in way below guidance.

Perhaps I should have bought SIFY back on the dip as a REDF hedge  :)

Anyway, I'm sorry for some confusion on this trade, you need to always keep attention to the newsletter, that's where the clear instruction is.

willey is opening is mauf a little more, I welcome it  :)

And yes, I'm not aware of the strenght of the two brands on the indian community, REDF and SIFY (REDF being more known than SIFY). But that isn't an investment criteria that I use, if REDF is so known, how come it generates so little on revenues (compared to market cap) and not all that much revenue growth?

As for the sector play, I don't think internet's will run much further this year, in fact I think they will collapse over the coming weeks/months, we'll see.

Considering REDF short, I think the stock is developing a head and shoulders pattern. The sholder stands at about $19.90. If there is confirmation of the pattern (which would occur on a close below the neckline, which stands at about $17.92), the target would be $22.12-$17.92=$4.2.  $17.92-$4.2 = $13.72.

So here's my trading setup:

1) REDF can't be set to close above $20.11 or I'll buy to cover (I have to give some room for a not so significant cut)
2) On the event that the H&S pattern confirms itself, I'll trade that pattern and take profits on the projected target.

I'll continue to monitor the H&S pattern on the chart below, to see if it plays out or not.

If we get a close above $20.11 the H&S pattern is no longer valid. If we get a close below the neckline, today at $17.84, the H&S pattern is confirmed and the technical target is something like $12.56 (yesterday I made a calculus mistake on the target, one should use the neckline level to the head, not the breakdown level to the head, to know the technical target).

So the trading plan remains:

1) HOLD REDF SHORT, unless it closes above $20.11.

I bought [email protected] short today.  The stock was moving up on low volume.  Buyers are all dried up.

Same for SIFY, I bought [email protected].  It could not break bast that.  Test four times throughout trading day.  With a huge day in the market it was not moving.  Started to sell off in the end.  I feel both of these stocks are overvalued at this point and the market will soon take effect.

Good luck to my shorties!

nobody has been paying attention that Oil is $64 a barrel.  I find this very odd that the market ignored this today, guesss wall street wants big money to come into the game so they are pressing the numbers up, the set up is beginning.  I could be wrong, but not alot of new money flowed into this rally.  Earnings starts in two weeks, I guess we'll figure it all out then.

One chart has several interpretations.

Only the fact can prove which one is right.

The fact is: it is still in uptrend.

Today's high of $21.16 met some profit taking presure.

But the buyers will come in to buy at around $20 and push the stock higher.

It will re-test year high of $22 in few days.

QuoteI bought [email protected] short today.  The stock was moving up on low volume.  Buyers are all dried up.

You mean you sold REDF short saffeysite. I think you did well, but I had to buy to cover just before the close, according to plan.

I bought REDF to cover my short position at $20.18, I still believe the stock is very overvalued and it doesn't make any sense, but I'm aware that often the market doesn't makes sense, it just goes where it wants to go without any regard for my financial health.

I can't control the markets or one individual stock behaviour, but there's one thing I can control: myself.

As said in the newsletter and SIFY's thread, I sold REDF short around today's open, price $19.46 (it seems it was a bit early).

More information on the next update (you can also check this thread (http://www.3stocksonfire.org/trading/index.php?topic=4074.0) for information on REDF and the SIFY's thread (http://www.3stocksonfire.org/trading/index.php?topic=3980.msg43146#msg43146)).

I know that you are long SIFY but as you know all too well, REDF and SIFY are a highly corelated pairs trade. I could not get any REDF to short, so I shorted SIFY (1000) at 10.37 just a few minutes ago. I see that SIFY almost closed the gap down (up to 10.72, while gap close is 10.80), but now there is a gap down to 9.05. Its funny ho Cramer pissed on SIFY the other day saying sell, calling them basically fools for not being able to execute and Internet strategy, to only come back and rec REDF like that. Seems totally inconsistent. I guess I never understood your rationale either, unless you intended to do a pairs trade (long SIFY, short REDF); but as an outright long or short I think both should be shorted. Did you use the opportunity to sell SIFY and take a nice 15%-20% profit on the purchase the other day??

As far as contest, I picked the worst of my three choices - NENG or GEOI - my two other choices would have placed me in the leader board; instead I picked MPET, and am surely on the loser Board. Well maybe the UDACHO field will be a winner and I will eat my words.

Here is Cramer's take about today's action : No Gall in 'Indian Google's' Leap  (http://www.thestreet.com/_yahoo/tech/internet/10264040.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA)

"Should Rediff (REDF:Nasdaq ADR - commentary - research - Cramer's Take) be up $5 because I said last night on "Mad Money" that I like it? Of course not; no one is that good, certainly not me. And this isn't false modesty. I have made a study of everyone, and no one is that good.
This is a stock, though, that was depressed. It was a coiled spring and went from being bad technically -- so people were short it -- to being good technically because it hit some level after I mentioned it on "Mad Money" last night. Would I sell it? If I owned it Tuesday at $15 and I didn't sell, I would be violating my bulls-bears-pigs rule, as I spelled out in Jim Cramer's Real Money: Sane Investing in an Insane World.

Of course, if you believe everything I say about Rediff being the Indian Google (GOOG:Nasdaq - commentary - research - Cramer's Take) -- and there is no reason not to believe that, given its standing in the country -- you could argue that it would get to $20 eventually. But what I think is appalling to some professionals is how it got there in one day.

To that I say, that's a problem with brokers and electronic brokers. As a broker at Goldman Sachs, I simply wouldn't let anyone buy a stock that was up $4 or $5 unless it was a $100 stock -- even if I wanted the commission and it was the end of the month and I needed to make my numbers! I believe that a combination of brokers who won't put limits on their customers and customers who trade online without enough discipline to do the job took this one up."


And another one : Why I'm Short Rediff (http://www.thestreet.com/_yahoo/tech/internet/10264068.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA) by Doug Kass (Street Insight Contributor)


"Jim "El Capitan" Cramer writes about Rediff.com, a company that he mentioned on "Mad Money" last evening.
Today the shares are more 35% higher based on Jimmy's bullish comments on the company last evening in which he forecast that it would rise back to $20 in the next few months. It did that this morning! I view REDF with less enthusiasm than my pal does and I will have some more detailed thought on REDF over the next few days.

In a recent piece, I suggested that some of "Mad Money's" viewers get caught up in the moment and bid -- with Internet speed -- some of his recommendations to absurd levels. (Jimmy justifiably ridicules such aggressive after-market buying in his column!) From my perch, REDF is a clear example of this giddiness, and I have taken a short rental (short-term long) in the name as I believe it will retreat right back into the mid teens over the next few weeks.

REDF is an unprofitable company with about 200 employees. The company publishes two newspapers and provides online information on shopping, entertainment -- oh yes and matchmaking and cricket! In addition, REDF provides a chat and messaging service in India. The company's annual revenues are less than $15 million -- down 30% from 2003 -- and the company has never been profitable. In this writer's opinion, comparisons of REDF to Google and Yahoo! fall ... ahem, quite a bit short!



Hope those articles at TheStreet.com bring more sellers  ;D

This one I agree with you for short position.

Cramer is just a show business man. You have to be your own boss.

He cannot make you money for free.

I rode REDF from $13 to high $19 before I sold a couple of months back. REDF's PE is very high, however, it's making money as opposed to SIFY is not.

REDF is equivalent to Yahoo & Google, while SIFY is equivalent to American online + Yahoo maybe. It's a bit harder for SIFY to make money because of the infrascture investment. I could be wrong, but I won't short either REDF or SIFY.


-Valueseeker

REDF is certainly not India's google and not certainly yahoo. Sometimes I suspect Cramer is not just spicing up his show but may have some thing up his sleeves.

All JMHO, of course...

Thursday should see the "megaphone pattern" ( traced out on the Dow industrials, which began just before December & which "double bottomed" on Wednesday, 1-25 ) begin its monsterous rise towards Dow 11,500!  It won't be a straight shot higher ( of course ) but will be impressive, to say the least, & will catch many folks off guard.

Anyway, given the above & its playing out ( as I suspect ), being short anything internet may not be the best way to good financial health...

...but, what do I know...

willey

Quote from: defenderyou on January 25, 2006, 01:00:31 PM
I know that you are long SIFY but as you know all too well, REDF and SIFY are a highly corelated pairs trade. I could not get any REDF to short, so I shorted SIFY (1000) at 10.37 just a few minutes ago. I see that SIFY almost closed the gap down (up to 10.72, while gap close is 10.80), but now there is a gap down to 9.05. Its funny ho Cramer pissed on SIFY the other day saying sell, calling them basically fools for not being able to execute and Internet strategy, to only come back and rec REDF like that. Seems totally inconsistent. I guess I never understood your rationale either, unless you intended to do a pairs trade (long SIFY, short REDF); but as an outright long or short I think both should be shorted. Did you use the opportunity to sell SIFY and take a nice 15%-20% profit on the purchase the other day??

As far as contest, I picked the worst of my three choices - NENG or GEOI - my two other choices would have placed me in the leader board; instead I picked MPET, and am surely on the loser Board. Well maybe the UDACHO field will be a winner and I will eat my words.

I think you did well selling SIFY short, as I read some more I have many doubts about the relationship between SIFY, Raju Vagesna (sorry if this isn't the correct name) and his brother. Don't like that mix and transactions with the company's assets.

I was selling SIFY anyway, but Cramer gave me the opportunity to profit nicely (well, not him, his followers). Sure I sold it, at $10.30, didn't you get the newsletter before the open? You can also see SIFY as a closed trade on the Stocks on Fire Portfolio page (http://www.3stocksonfire.org/3stocksonfire.php).

My pick at the Contest (DIET) isn't doing well either  :-[

Quote from: shawFund on January 25, 2006, 03:32:57 PM
This one I agree with you for short position.

Cramer is just a show business man. You have to be your own boss.

He cannot make you money for free.

I like to read what he writes, and listen to what he says, and I might even pay for that, but, as I look at his portfolio, it is up what, 15% over the last 3 years? I was once a subscriber to his service, but it seemed like he never bought or sold anything for real, he just danced around positions. «Now I sell 500 of my 6,000 shares», «now I buy back those 500 and add another 500», always around the same core holdings.

Off course I always think and invest with my own head, though I try to learn a lot from others.

Quote from: valueseeker on January 26, 2006, 12:22:08 AM
I rode REDF from $13 to high $19 before I sold a couple of months back. REDF's PE is very high, however, it's making money as opposed to SIFY is not.

REDF is equivalent to Yahoo & Google, while SIFY is equivalent to American online + Yahoo maybe. It's a bit harder for SIFY to make money because of the infrascture investment. I could be wrong, but I won't short either REDF or SIFY.
-Valueseeker

Thanks for your opinion Valueseeker  :)

I see REDF with about $16M in revenues in 2005 and a $496M market cap  :o

I believe this overvaluation is impossible to sustain for much longer !

Quote from: stocky on January 26, 2006, 01:07:36 AM
REDF is certainly not India's google and not certainly yahoo. Sometimes I suspect Cramer is not just spicing up his show but may have some thing up his sleeves.

Well, we just don't know ... but I bet that there are many people, even companies, chasing him so that he recommends their stock. REDF seems like an ordered job, but I don't think Cramer needs stuff like that, or the risk.

Quote from: willey on January 26, 2006, 01:38:04 AM
All JMHO, of course...

Thursday should see the "megaphone pattern" ( traced out on the Dow industrials, which began just before December & which "double bottomed" on Wednesday, 1-25 ) begin its monstrous rise towards Dow 11,500!  It won't be a straight shot higher ( of course ) but will be impressive, to say the least, & will catch many folks off guard.

Anyway, given the above & its playing out ( as I suspect ), being short anything internet may not be the best way to good financial health...

...but, what do I know...

willey

willey, you said the same thing just before REDF went down 20-30%, remember? The market can go up a lot and a bad stock can go down, don't you think? But I agree with you, shorting is not all that fun and I consider this REDF short just as a trade, a trade that I might even close today (I'm still studying, and Jimbo's post seems promising).

Quote from: Jimbo on January 25, 2006, 02:38:59 PM
Here is Cramer's take about today's action : No Gall in 'Indian Google's' Leap  (http://www.thestreet.com/_yahoo/tech/internet/10264040.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA)

"Should Rediff (REDF:Nasdaq ADR - commentary - research - Cramer's Take) be up $5 because I said last night on "Mad Money" that I like it? Of course not; no one is that good, certainly not me. And this isn't false modesty. I have made a study of everyone, and no one is that good.
This is a stock, though, that was depressed. It was a coiled spring and went from being bad technically -- so people were short it -- to being good technically because it hit some level after I mentioned it on "Mad Money" last night. Would I sell it? If I owned it Tuesday at $15 and I didn't sell, I would be violating my bulls-bears-pigs rule, as I spelled out in Jim Cramer's Real Money: Sane Investing in an Insane World.

Of course, if you believe everything I say about Rediff being the Indian Google (GOOG:Nasdaq - commentary - research - Cramer's Take) -- and there is no reason not to believe that, given its standing in the country -- you could argue that it would get to $20 eventually. But what I think is appalling to some professionals is how it got there in one day.

To that I say, that's a problem with brokers and electronic brokers. As a broker at Goldman Sachs, I simply wouldn't let anyone buy a stock that was up $4 or $5 unless it was a $100 stock -- even if I wanted the commission and it was the end of the month and I needed to make my numbers! I believe that a combination of brokers who won't put limits on their customers and customers who trade online without enough discipline to do the job took this one up."


And another one : Why I'm Short Rediff (http://www.thestreet.com/_yahoo/tech/internet/10264068.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA) by Doug Kass (Street Insight Contributor)


"Jim "El Capitan" Cramer writes about Rediff.com, a company that he mentioned on "Mad Money" last evening.
Today the shares are more 35% higher based on Jimmy's bullish comments on the company last evening in which he forecast that it would rise back to $20 in the next few months. It did that this morning! I view REDF with less enthusiasm than my pal does and I will have some more detailed thought on REDF over the next few days.

In a recent piece, I suggested that some of "Mad Money's" viewers get caught up in the moment and bid -- with Internet speed -- some of his recommendations to absurd levels. (Jimmy justifiably ridicules such aggressive after-market buying in his column!) From my perch, REDF is a clear example of this giddiness, and I have taken a short rental (short-term long) in the name as I believe it will retreat right back into the mid teens over the next few weeks.

REDF is an unprofitable company with about 200 employees. The company publishes two newspapers and provides online information on shopping, entertainment -- oh yes and matchmaking and cricket! In addition, REDF provides a chat and messaging service in India. The company's annual revenues are less than $15 million -- down 30% from 2003 -- and the company has never been profitable. In this writer's opinion, comparisons of REDF to Google and Yahoo! fall ... ahem, quite a bit short!

Hope those articles at TheStreet.com bring more sellers  ;D

Great post and info Jimbo, thanks  :-*

I used Cramer's recommendation to sell SIFY with a nice one day profit and now I'll use it again to close my REDF short also with an handsome profit, I believe.

I see people that bought yesterday scratching their heads thinking: «Cramer sold, and now there's this other guy at thestreet.com, also respectable, saying he is short the stock. I better sell»

My estimate is that they will sell it enough to fill the $16.79 - $16.83 gap and that's where I'll take profits, hopefully today.

QuoteI  like to read what he writes, and listen to what he says, and I might even pay for that, but, as I look at his portfolio, it is up what, 15% over the last 3 years? I was once a subscriber to his service, but it seemed like he never bought or sold anything for real, he just danced around positions.

I'd pay for a service that e mailed me, that morning,  what stocks he is going to feature on his show that night. You could make serious "mad money" trading with that knowledge as he is now a mover of markets as evidenced by REDF.

I'm short REDF 640 shares at $16.00 which, Thanks to Cramer, got smoked Wednesday.
I shorted another 1,000 today at $19.71 based on David's analysis and this:

(http://img.photobucket.com/albums/v11/kcscott/REDF1-27.png)

Shooting Star
The shooting star is made up of one candlestick (white or black) with a small body, long upper shadow and small or nonexistent lower shadow. The size of the upper shadow should be a least twice the length of the body and the high/low range should be relatively large. Large is a relative term and the high/low range should be large relative to the range over the last 10-20 days.

For a candlestick to be in star position, it must gap way from the previous candlestick. In Candlestick Charting Explained, Greg Morris indicates that a shooting star should gap up from the preceding candlestick. However, in Beyond Candlesticks, Steve Nison provides a shooting star example that forms below the previous close. There should be room to maneuver, especially when dealing with stocks and indices, which often open near the previous close. A gap up would definitely enhance the robustness of a shooting star, but the essence of the reversal should not be lost without the gap.

Thursday's decline and today's action (so far) seem to confirm the weakness.
Looking at money flow would tend to confirm the over reaction to Cramers claims.

MACD did turn upward - and I won't allow this to run away, so my out is a 20.63 Close (13% of my $18.26 Average).

Heading into REDF earnings announcement next week, I feel the selling pressure will commence in earnest.

Cramer's followers also have been noted to have very low threshold of pain.

I guess I'm about to find out.

Hi David,

You missed the entire point of my post!  My post was about the Dow stocks & the markets direction in the short term!  REDF was mentioned merely to reflect that in a BULL MARKET, shorts can easily get burned!!!

I guess we don't communicate well, huh?

Best to you & keep up the great picks...

willey

Quote from: willey on January 27, 2006, 09:56:19 PM
Hi David,

You missed the entire point of my post!  My post was about the Dow stocks & the markets direction in the short term!  REDF was mentioned merely to reflect that in a BULL MARKET, shorts can easily get burned!!!

I guess we don't communicate well, huh?

Best to you & keep up the great picks...

willey

Hello willey, hey, what do I know about English?  ;D

REDF will release 4th quarter results on Thursday before the opening bell: Rediff.com India Limited Schedules Third Quarter Conference Call For February 2, 2006 (http://www.marketwatch.com/tools/quotes/newsarticle.asp?dist=&param=archive&siteid=mktw&guid=%7B7D517EFE%2D6A4E%2D4D44%2D9A07%2DCF143AF37986%7D)

I don't have any 10-Q Form from REDF, they never filed one, its a shame ... just 6-K files with  text. Perhaps this explains the overvaluation, nobody reads their numbers carefully.

And I'm not the only one saying REDF is overvalued, the company's CEO also said that:

Quote«"We are valued higher than the most valuable internet company (Google) in the world," says Ajit Balakrishnan, chairman & CEO of Rediff.com India Ltd.

On this article, the CEO also says he's somewhat "afraid" to list the company on Mumbai's stock market, because Indian investors "may not understand the valuation."

You can read the whole article here:       
With Google after Microsoft, Rediff hopes to reap India advantage (http://www.dnaindia.com/report.asp?NewsID=1003206&CatID=4)

The thing is Google is Google, not only in the US, but around the world. I live, as you know, in Portugal, and I don't use www.sapo.pt or www.clix.pt as search engines (these are "popular" Portuguese portals), of course I use Google, even when I search for Portuguese content.

With about $600M in market cap and just about $15M in revenues for 2005 REDF is, as REDF's CEO confirms, the most highly valued internet company in the world !

I'll close this trade at the $16.79 - $16.93 gap, when Cramer's hype ends.

Hi David,

Good fortune to you!

If I was a bettin' man, I'd say the Dow stocks blow thru 11,000 this week!  If that happens, it'll drag higher many overvalued stocks.

but, what do I know?

willey

The chart looks bullish to me at this point. I avoid being short on stocks when they get massive volume like we saw on Wednesday. I think a retest of $21.40 happens prior to earnings.  What happens after earnings is anyone's guess. Probably will sell off but who knows. Or as willey likes to say, what do I know? ;D Maybe instead it gaps up to $50 on Friday.

 :o  I got this blog off the yahoo board it supports the REDF short position.... some interesting reading

http://gaurav1.blogspot.com/2006/01/hype-on-rediff.html

earnings this week will tell the tail

Sold my long position at $21.35. That's where I set a "just in case" limit order this morning -- looking for a retest of Wednesday's high and it got it and more.  I think REDF will go a little higher tomorrow, but not enough to justify getting back in. After all, probably half the stocks in the stock universe will go up tomorrow, right?  Gotta save powder for plays like PEIX, which I championed last night and rocketed today - perfect timing!!

Cramer reaffirmed his position on REDF last nite.  Said to check out TheStreet.com and Jim Altucher's article.  But it looks to be a subscription only article.  Anyone have access who can give us the skinny on the bull case?

Anyways, I am looking for a buy the hype, sell the earnings scenario.

Ok guys, I'm throwing down the towel on REDF short. I have 2 strong reasons to do it:

1) REDF short yesterday almost killed the performance on the Stocks on Fire Portfolio, which rose just 0.3% because REDF rose 7.78% and it is a 10% of capital position.

2) My analysis has a flaw  :-[ And it's not Cramer's «REDF is India's Google», it is much more profound than that ... the thing is, each American Depository Shares only accounts for 1/2 of REDF shares ! Honestly this is the first time I see something like this. So, with 25.76 million ADS outstanding, there are half of that number in shares outstanding, so the number of shares outstanding is 25.76/2 = 12.88 million shares. That said, the market cap is 12.88M * $21.45 = $276.28M (Yahoo has $552M, Market Watch has $308M). Still expensive when compared to revenues, but my bearish case on the stock was killed by this information:

«We are offering 3,026,480 of our American Depositary Shares ("ADSs"). Each of
our ADSs represents 1/2 of one of our equity shares.

Our ADSs are traded on the Nasdaq SmallCap Market under the symbol "REDF". On
November 8, 2005, the last reported sale price of our ADSs was $ 18.66 per ADS.»

I live and learn. When I see that I am wrong I take a loss, paying for the tuition fee. The lesson taken is: when trading ADR or ADS, check to see if they represent 1 full share of the company's stock or not.

Thank you market !

DR and I seem to be on opposite sides of the coin with REDF. Maybe due to some strange cosmic phenomenon, I don't know. I was buying when DR was shorting, and shorting when DR was buying (to cover) ;D The open was a great spot to short because it was almost a double top (22.12 the 52 wk high set on 12/12. And with earnings in two days, I smell a selloff. Only problem is Ameritrade told me "no shares available to sell" so my short is a paper-short. Monopoly money. Maybe when I cover I will be able to afford to buy houses on Ventnor Ave and Marvin Gardens ::)

David:
I do not understand how you calculate market cap. Assuming is half share for ADS, which is 12.88 M shares. but the price of half share is $22, so a whole share is $44. the market will be still 12.88x44=~500M. Am I wrong?

Quote from: winner919 on January 31, 2006, 08:12:03 PM
David:
I do not understand how you calculate market cap. Assuming is half share for ADS, which is 12.88 M shares. but the price of half share is $22, so a whole share is $44. the market will be still 12.88x44=~500M. Am I wrong?

Oh my God, probably you're right. My brain can't look at this issue now, it seems so simple, and I'm sure it is and probably you're right, but I'm totally blocked.

I'll take the following actions:

1) Remove this thread to the Previous 3 SOF picks board, letting some more people talk about the subject.
2) I'll avoid trading REDF for some time, maybe forever, since I have problems understanding it  ???

Thanks for your contribution, totally puzzled by this simple math thing  ???

Pullback before buy to cover?  :'(

Happy trading...Jody

Cramer is on a personnal crusade for this stock.
3 Mentions in 3 days.

They reported earnings of .0123 and it was losing Mo and he gave them another pump on tonight's show.

Un-Freaking Real.

Wished I had been as "clueless" as David and bailed out.

It will go down, eventually, but playing to wait is a sucker game.

Probably out sometime late tomorrow

KC - good thing you covered Friday :o. What a monster!!

unfornately, I got caught by cramer. short at $20 and do not know how long I need to wait. fortunately, I did not short too much. correct david calculation abd believed REDF is overvalue. but that is stockmarket

Hi Folks,
Taking all my profits as a long in REDF today!...I was the other side of the trade with David on this puppy & it worked out this time!
:-)))

Remember, there are "hidden hands" behind this one & think long and hard before you ever short this...It's now ridiculously overvalued & I'm now out!

willey

It is hard to make money by shorting stocks unless you are very sure that you are shorting a
really bad managed company.

Nice trade Willey. I wish I had stayed in, but I didn't want to take a chance with the earnings report. I could've jumped in right after though. Sometimes in a group like this there is a risk of getting caught up in groupthink (this is sometimes referred to as "drinking the Kool-Aid"). For example, with REDF the groupthink was REDF is way overvalued and a surefire short. The chart vehemently disputed that assessment the day REDF gapped up and had incredible volume. I had a small sip of the Kool-Aid which may have contributed to me not buying back in after earnings. On one hand the chart looked great and the earnings risk had passed. On the other hand, you can't help but have it in the back of your head all the analysis about REDF being the most overvalued stock since the dot bomb days. Willey, applause to you for a good trade and seeing something most of us could not see with REDF!

Time to short................again  ???

Down AH to $29.50,  -1.68 (-5.39%) after Cramer's downgrade tonight :

"HERE'S THE DEAL:  WE ARE NOT GOING TO REPEAT THE ERRORS OF 1999; WE ARE NOT GOING TO OVERSTAY OUR WELCOME. RIGHT HERE, RIGHT NOW, I AM DOWNGRADING REDF. SELL, SELL, SELL!  I RECOMMENDED IT AT 16.00 AND I GOTTA TELL YOU:  BULLS MAKE MONEY, BEARS MAKE MONEY AND HOGS GET IT MADE INTO JIMMY DEAN SAUSAGE, AND I CAN'T HAVE IT HAPPEN.  REDF - RING THE REGISTER!  WE CAUGHT A DOUBLE FOR HEAVEN'S SAKE!"

Quote from: willey on February 08, 2006, 01:32:57 PM
Taking all my profits as a long in REDF today!...:-)))

willey,

Nice play, and great timing!  Applause.

Quote
Remember, there are "hidden hands" behind this one

Based on Jimbo's post (applauded), I'm going to hazard a guess that those "hidden hands" are attached to the arms of a guy named Cramer.

Quote from: Jimbo on February 08, 2006, 08:58:52 PM
Down AH to $29.50,  -1.68 (-5.39%) after Cramer's downgrade tonight :

"HERE'S THE DEAL:  WE ARE NOT GOING TO REPEAT THE ERRORS OF 1999;

Interesting post about Cramer's comments, Jimbo, (Applause) particularly that comment.  If a guy like Cramer can keep pounding the table on a stock like REDF and move it 124% in 11 trading sessions, aren't we kinda repeating the errors of 1999?

???  ???  ???

I watched his show at Harvard.  Cramer certainly has entertainment value for some, but I thought what a shame it is that those young people are getting caught up in the idea of making instant "Mad Money," ala 1999/2000 "internet stock" mania. 

Sadly, those kids are in for a rude awakening.  BOOYAH will quickly turn into BOOHOO for many of them after they get burned a few times on Cramer's stocks, like some of them will on REDF.   

Quote from: KCScott on February 02, 2006, 11:31:09 PM
Cramer is on a personnal crusade for this stock.
3 Mentions in 3 days.

Pump...pump...pump...

Quote
It will go down, eventually,

Evidently, Scott, it's going to go down because Cramer says it's going down.

feel relieved. hopefully, I can buy back at my short price ;D

Maybe today is the day to short REDF on Cramer's day - not just cos he said so, certainly helps and stymmies any more of a bull run, but because of all the reasons david laid out in the first place.  I won't but I'm sure a lot of other people are thinking about it....

If I see Cramer, I will fight him  :P

No shares available to short.....  ARRGGGHHHH!!!!!!

I honestly believe he tipped his buddies on in the Hedgies that he was gonna call "take profits" on the show and they grabbed every last marginable share out there.

$8,000 later a very hard lesson learned.