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Get ready to cover our short stock pick PokerTek (NASDAQ:PTEK)

Posted June 6, 2008

Action to Take: Get ready to cover our short stock pick PokerTek (NASDAQ:PTEK) at $4.55 and below

Baltimore — (TFN): I have to confess that nothing annoys me as much as the silly theatrics surrounding a poker game. I’d rather watch middle school chess than the last Bond movie (which, if you whittle it down, really was just a particularly annoying and under-edited poker flick.)

Yes, I know, people like it and spend ungodly sums on pretending to be cool — hence the run-up in the price of PokerTek (PTEK) last Wednesday, when they leaked that some “business-is-war” desk jockeys seemed enamored of the company at the Goldman Sachs Lodging, Gaming, Restaurant and Leisure Conference.

To me, this kind of news smells like a great shorting opportunity.

On Wednesday, June 4, I wrote: “We’re of two minds regarding the company. For one, even after today’s run-up, it’s still trading below $5.50… over 50% below its 52-week high. It has negative EPS of -1.14, and its stock price trajectory has follwed that of U.S. consumer sentiment downward. The momentum appears to steep, the trigger to flimsy to validate even a short-term hold.

Venturesome investors should consider a short poition between $5.50 and $6… betting on an equally rapid decline of up to 33% by mid-month.”

I’m not going to wait around for further drops. The stock traded as low as $4.50 this morning, which would represent a short gain of 18.18% over the entry level of $5.50, which we had achieved yesterday. Even at the current price of $4.55, we’d be on our merry ways into the weekend with a 17% gain.

So go ahead and cover your shorts. We’re counting it at $4.55 with a 17% gain!

And for today’s momentum pick, see our write-up on Inspire Pharmceuticals (ISPH).

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Posted by J. Christoph Amberger · Filed Under US Stocks and Markets 

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