5 things we know about Blackberry (closing short)

Here are 5 things we know about Blackberry:

  1. Prospects for the company as a stand-alone entity appear to be bleak, with shrinking market share and increasingly irrelevant operating system.
  2. Company buy-out seems to be Blackberry’s only hope to turn around their fortunes.
  3. Out of 293 institutional shareholders, 142 decreased their positions while only 115 increased their positions for a difference of about 8million shares or 15%.
  4. We are seeing a large number of Canadian Institutional and Retail traders alike bullish on Blackberry stock, but less enthusiasm for the stock outside of Canada.
  5. The last time we saw this much Canadian enthusiasm for a fledgling former Canadian success story was Nortel Networks.

With all of these factors in play, BBRY shares have been trading in a range and spiking higher and lower on any and all news.   Last week, the Wall Street Journal reported, that the company ‘intends to run a fast auction process that could be wrapped up by November’, quoting unnamed ‘people familiar with the matter’.  The stock gapped open on the news but then faded late in the day.

On our algorithm’s August 30 short signal we wrote:

It appears there is a fight between bears and bulls for the $10.00 handle, so some chop can be expected and the Market will decide where BBRY price goes from here. Our algorithm works on probabilities, and right now it’s saying that based on past trading patterns, BBRY will weaken.. We’ve learned to listen to it over the years, but because this is a short call on a beaten down stock we are lowering our risk level on the trade which reduces the number of shares and thus the amount of capital that is exposed.

That battle, it seems has taken the price back up to the top end of a 2-month range to a VWAPrice of $11.00 where it remains to be seen if it can break through.  The flavor of algorithm we set up for this works on a daily time frame, however BBRY is experiencing volatility unusual on this time frame and makes trading in this stock a highly speculative proposition.   To trade this level of volatility would require our intraday (minute) algorithmic signals which are only available to our clients.  While this algorithm has recently generated a buy signal, it is for these reasons we are closing the daily time frame algorithmic BBRY signal and going neutral.. for now.  If the stock should close in a straight line above $12.00 we will run the algorithm again to determine if any of the patterns we are seeing coalesce.

In summary, as BBRY experiences aimless price drifting from headline risk, speculation and possible manipulation, we believe that the only winning move at this point is not to play, at least until official progress updates are released by the company.

 


The content contained in this blog represents the opinions of the authors who may or may not hold long or short positions in securities of various companies discussed in the blog based upon the authors' views. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied solely upon in making investment decisions, ever. It is intended for the entertainment of the reader, and the authors. In particular this blog is not directed for investment purposes at US Persons.
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