LIWA has been one of the best trading stocks for me over the last year. As many of my followers can attest, I have bought LIWA near the bottom and sold it near the top, over and over again. I’ve been able to do it countless times – and the stock has delivered enough volume so that anyone can follow and do the same.
This stock is not for beginners or the weak of stomach, no question about it – you must have ice flowing through your veins to be successful trading this stock. It also helps to understand the fundamentals of a company before you go passing judgement on a company.
The main reason for the volatility is simply because of the high ratio of retail investors in the stock. Their numbers and growth seem to be incredible, and that’s what’s got me onto the name in the first place. I started buying LIWA in the $6 range and I still own those shares in my long term account. ..but along the way I have picked up large trading positions and turned them into profit fairly quickly. The key to stopping this volatility was for the company to do a deal with an insitution.
Everyone likes a good deal, and you simply cannot argue with the numbers. I am certain that LIWA was working on a deal since they filed the initial shelf. They had a 100m shelf filed some time ago, and while I was mocked for picking up the stock in the low 8s and high 7s I knew there would be many catalysts to move it up.
I am still waiting for an apology from those who mocked me, but I guess there is no better redemption then blowout numbers and a stock that BOOMS multiple times. …and that was exactly what happened. I loaded a large position with an average of $8 and sold all of it at $10. I then reloaded in the low 8s and sold it again in near $10. All of this before earnings. Prior to this quarter I loaded most of my position in the 6’s and sold in the 12s, then the stock actually hit $14 one day. I knew the volatility would remain while the retail:institutions remained high.
I was expecting great earnings, and come earnings day the stock ripped again… but then something happened: it stalled. I then notified everyone in the Boom Factory to sell their positions immediately as the volatility would remain despite incredible numbers. I then tweeted the secondary had to come in order to gain some stability in the stock and I would start loading again in the low 8s. I loaded a fairly large position again in the low 8s, and there you have it – the secondary was announced (finally) and the stock immediately SPIKED.
The big question is WHY would a stock spike after a dilutive secondary was announced? Simple: LIWA is growing, they are using the cash to grow, not to save themselves. Unlike 99% of the small cap crap you see out there who file secondaries to keep the doors open, LIWA management came up with a plan to use the money for future growth. …and grow they will.
While most stocks (even the good ones) dip after a secondary, LIWA screamed on, simply because it was way overallocated and almost every smart investor was waiting on a deal to happen. Essentially they underused the shelf, they only raised around 30m – and it was completely oversubscribed. The minute I heard that it was oversubscribed I knew the stock would spike because they then followed through with market buys to fill their positions.
Just remember this, secondaries aren’t always a bad thing. ..and when a company announces they’re making roughly $1.80 a share you CANNOT say “well after the secondary they only made $1.20…” – that’s completely noobish, and something that non-experience investors do.
This is one of the main reasons that many retail investors got burned on LIWA multiple times. An experienced investor looks at forward growth, and works the numbers based on the forward shares for that year.
What’s the moral of the story? Never look back.. and never follow the herd, otherwise you’ll end up clowned like many did trying to “predict” what would happen with LIWA.