December 4, 2000
MAINE STOCK TRENDS
November: a Roller Coaster Month for I-Many Shareholders
Copyright © 2000 Blethen Maine Newspapers Inc.
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Connecticut investment group buys 6 percent of I-Many (November 27, 2000)
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Portland's I-Many (IMNY-13.88) fell 26 percent last week and easily earned the distinction for being the worst performing local stock of the week. November was a roller coaster month for I-Many shareholders. The stock closed out October at $20.63. Three days into November, it rose to $27.38, then, by month end, dropped to $10.38. During the month, nary an analyst seems to have altered his/her position on the company: there are still two "strong buys" and two "buys" according to I/B/E/S — all for a company that is expected to lose millions this year and next. Other than a small acquisition early in November, there really wasn't any other news to account for the stock price movement.
Short interest continues to build in I-Many, though. "Short interest" is the term used to describe the number of shares of stock that are "short". The figure is released as of the 15th of each month. Short sellers borrow stock and then sell that borrowed stock in anticipation of a lower share price. When the stock price drops sufficiently, the short sellers cover their shorts and they profit from the difference between the (presumably higher) price at which they sold, and the (presumably lower) price at which they bought the stock back.
I-Many's short interest has steadily climbed from nothing in July, when the company went public, to 153,846 shares in October to 215,660 shares for November 15, the period that was released last week. Based upon the official NASDAQ's statistics, I-Many's volume averaged 114,401 shares. The outstanding short interest represents 1.89 days of trading at that volume of trading.
Speaking of growing short interest coverage ratios, IDEXX Laboratories (IDXX-23.13) saw its short interest continue to grow last month also. There are now 2.95 million shares of IDEXX that have been shorted as of the November 15 release date. That's the highest number of shares short in a year. Coupled with decreasing stock trading volume, short interest now represents about 11 days of trading volume. What this means is that if all the shorts were forced to cover their positions, that event by itself, would supply 11 days of trading volume to IDEXX stock. That's pretty bullish.
There wasn't much bullishness for Fairchild Semiconductor (FCS-14.82), though last week. The stock competed with I-Many for worst performing stock of the week. Fairchild fell as low as $13.125 on Thursday, before rallying on Friday to close down 23 percent for the week. Of course, Fairchild had reasons to fall. After the market closed last Wednesday, the company announced that "Inventory-driven backlog adjustments are continuing," as customers try to balance inventory for more modest growth expectations in 2001. Fairchild went on to say, "While we continue to expect a more challenging pricing environment over the next few quarters, we are also confident that we will offset price erosion on mature products with a stronger product mix and continued manufacturing cost reductions." The company is still looking for 4th quarter revenues of $490 million, but admitted that there may be softness in the first quarter of 2001. That was all it took for two brokerage firms to downgrade the stock Thursday morning. All the same, Fairchild predicted that its revenues would grow 20 percent in 2001, which isn't bad.
Nyer Medical (NYER-3.50), a medical products distributor out of Bangor, fell 12.5 percent last week. There wasn't any news to account for the price move.
Banknorth Group (BKNG-19.31) moved up 6.1 percent last week, its highest price since last November.
American Skiing Company (SKI-2.69) was up 7.6 percent last week. The ski resort owner will report first quarter results on Wednesday. Presently, there is just one estimate for the quarter. That estimate calls for American Skiing to lose $.95 per share for the quarter that just ended October 24. A conference call with analysts will be broadcast live on the Internet on December 6 at 3 p.m. More information is available at <www.peaks.shareholder.com The company holds its annual meeting Tuesday, December 12 at The Canyons in Utah. American Skiing operates on a fiscal year, which ends on the last Sunday of July. That explains why the company holds its annual meeting in December.
December is often a month for bargain stock picking on Wall Street. It's the last chance to sell losing stocks, take the loss, and be able to report the loss on the current year's income taxes. That's important because there are a lot of losses in the stock market this year. Many investors with gains elsewhere in their portfolio often decide to dump their dogs and move on. Some great bargains can be found this time of year in good companies. Just keep your eye on the list of stocks hitting their 52-week lows. When it looks like the bottom has been reached, venture forward.
Last year as an example, tax loss sellers drove Brunswick Technologies to as low as $3 per share in mid-December 1999. It closed out the year at $3.50 per share. That was for a company that went public at $9.50 in February 1997, doubled its revenues and doubled its earnings in a little less than three years. When the tax selling subsided, Brunswick Tech rose to more than $6 a share during the first few trading days of 2000.
As things stand right now, the best local candidate for a tax loss selling bargain is probably Fairchild Semiconductor, which hit a new low last week. Saco's Intelligent Controls (ITC-1.38) is a possible candidate as is American Skiing. But, American Skiing usually hits its annual high during the fourth quarter, which means it probably isn't a very good candidate. Some of the local banks are worth watching, though. They may not move to new lows, but a few have really compelling dividend yields, and all of the following are still trading substantially off their highs of the past couple years. Here are some local banks to watch for year end tax loss selling: Bar Harbor Bancshares (BHB-14.75) which has a dividend yield of 5.15 percent; Camden National (CAC-13.13) with a dividend yield of 4.88 percent; Southern Maine's First Coastal (FCME-8.50); Damariscotta's First National Lincoln (FNLC-15.25) with a dividend yield of 4.46 percent; and Auburn's Northeast Bancshares (NBN-8.25) with a dividend yield of 3.03 percent
Brad McCurtain is president of Maine Securities Corporation. Maine Securities Corporation is an investment firm specializing in Maine's securities. From time to time, the corporation, its employees, and its clients may buy, hold, and/or sell positions in companies mentioned herein. As a regulated securities broker/dealer, the company and its employees are required to abide by all securities regulations at all times when communicating with the public. Brad McCurtain may be reached at info@MaineSec.com. Web site: http://www.MaineSec.com