Re: [CANSLIM] Lessons Learned - 2 BO Failures Today

From: "Frik Lebom" <talkcanslim@hotmail.com>
Subject: Re: [CANSLIM] Lessons Learned - 2 BO Failures Today
Date: Wed, 16 Jul 2003 10:36:17 -0700

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Top of Thread: [CANSLIM] Lessons Learned - 2 BO Failures Today "Kelly Short"
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Hi,

IMHO a real CANSLIM stock is not just a stock that have a nice technical 
"entry point". I truly believe a canslim investor should look for powerful 
growth stocks that have strength to drive the price higher. In the case of 
HUM, the 1st and foremost fundamental consideration, "C" in CANSLIM is 
simply not there. Not only the stock did not meet the 25% recent quarter 
increase in EPS, it actually declined(for 2 consecutive quarters comparing 
to same quarter previous year). WON also try to look for stocks that have 
good ROE and profit margin, in HUM's case, both of these figures are not up 
to mark too.(I personally do not blindly chase a profit margin of 18% like 
WON suggest, but it really seem too low in this case,same thing with ROE..)

Although I always get tempted to stocks that show a good "technical entry 
point", I just try to remind myself I am a CANSLIM investor, not a "cup with 
handle" investor. A good cup with handle stock might be able to show 
nearterm increase in stock price but in my opinion a trueCANSLIM stock have 
a much higher chance to be my BIG winner.

Thanks,

Frik


>From: Bill Triffet <btriffet@earthlink.net>
>Reply-To: canslim@lists.xmission.com
>To: canslim@lists.xmission.com
>Subject: Re: [CANSLIM] Lessons Learned - 2 BO Failures Today
>Date: Wed, 16 Jul 2003 09:53:03 -0700 (PDT)
>
>Might I add the fundies on HUM were on the weak side for my taste. Handle 
>was sloping up as well.
>
>Most of the recent BO's have had low fundies. Could be a sign?
>
>--
>Bill
>
> >>For the group:
>
>I got stopped out today on two BO purchases: HUM and BSTE. I'll share my
>"lessons learned" with the group so that hopefully someone will benefit 
>from
>my loss:
>
>I had done my usual due diligence on both stocks and had given them a
>"green light with reservations". Turns out I should have given more 
>credence to
>the "with reservations" part. Upon further examination, I see that high
>institutional ownership and strange action in the handle are common in both
>stocks as shown below:
>
>HUM:
>Institutional Ownership = 68%
>Chart action = High volume in handle
>
>BSTE:
>Institutional Ownership = 99%
>Chart action = Wedging action in handle
>
>High institutional ownership places an equity at the mercy of institutions
>who can sell of huge chunks at any given time and therefore put your
>purchase in a free fall. High volume in the handle does not prove the 
>sellers
>are "drying up" to allow the stock to move upward. The wedging action in 
>the
>handle is a sell signal - a bad signal just before an expected breakout.
>
>These are my observations from my post-mortem of these two purchases. If
>anyone else sees additional items, or disagrees with my reasoning above, 
>I'd
>love to hear your comments.<<
><< MESSAGE.HTML >>

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