What’s with Broadwind Energy today?
Today's Financial News - Posted June 26, 2009
Congress is working overtime to try to revive the nation’s economy. Today’s Cap-and-Trade vote is fueling speculation. Is Broadwind Energy (NASDAQ:BWEN) really worth 35% more or have investors been duped?
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): With a Cap-and-Trade vote imminent, speculation is growing by the minute. What if Congress pulls off major reform? How will the economy react? Who will be the winners? The losers?
For long-term investors, the volatility can cause early baldness.
For short-term traders, on the other hand, it is a dream come true. There are investment opportunities all over the place.
One of the biggest movers in the pre-vote hype is Broadwind Energy (NASDAQ:BWEN), a growing player in the nation’s wind-energy industry. As a maker of turbine gearing, the company stands to see substantial growth if the sector finds the legs so many politicians are trying to force.
As I write, shares of the billion-dollar company are up by more than 35%. The stock closed the day yesterday at $8.23 and is currently trading for $11.23.
With no material news coming from Broadwind executives today to explain the massive surge in valuation, investors are left wondering what to think.
Is the action due to Pelosi’s impending vote? Or is there something bigger on the way?
I will save the pain
While only time will tell for certain, my money is on the speculative bet. I have studied all sorts of merger announcements, acquisition deals and contract releases throughout my career. There are almost always “tells” leading up to a big news event, but rarely are they as obvious as today’s.
Insider buying is a great way to end up in court and a 35% price spike typically catches a few regulatory eyes. Insiders are not responsible for the extra million or so shares exchanging hands today.
It is speculative money.
If you are looking to take advantage of the day’s action, the short side offers the strongest profit opportunity, especially if today’s vote is a no go.
As the markets digest the action and realize the nation’s economic situation is not going to change overnight, Broadwind will give up much of today’s gains, even if only temporarily.
Options investors would be smart to investigate some short-term puts, while folks that like to stick with the equity side of things should think about borrowing shares today and paying for them later.
This is a strong short opportunity. If the legislation fails, it will look even better.
I like wind power, but the speculation throughout the industry is far too overdone.
Next Article: NCI Building Sytems: Blame it on those greedy shorts
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