Friday, July 01, 2011

YRCW Coverage Dropping Like . . . Flies On A Unionized Truck

Publicly traded companies like the attention they get from research analysts who give them formal coverage.  The thing is, you have to be a solidly profitable company with a bright future to warrant coverage.  Sadly, YRC Worldwide no longer meets that description, which is why research coverage of the firm is drying up.  Don't worry, YRCW, I'm still tracking your every move. 

Maybe the Teamster monthly newsletter can initiate coverage of the stock.  The union is already giving it a shot with media puff pieces, but they need to try harder for Wall Street to take them seriously.  The union would first have to find members eager to put down the donut box long enough to pick up a YRCW annual report.  They'd also have to start reading the business section of the daily paper instead of the comics page so they can understand why lame stocks like YRCW can experience a massive one-day run based on nothing at all. 

Here's my theory as to how this trading anomaly may have occurred.  Perhaps some hedge fund algorithm mined the market for low-priced stocks with an extremely high short interest (over 20% of float for YRCW right now).  Then maybe the fund took outsized positions in YRCW options (which surged over 1200%) in the hope of driving a short squeeze that would force up the share price for some quick gains.  Come on, I'm just guessing here.  I don't have time to look for confirmation of large institutional long positions placed into YRCW or its options chains this week, but it's just fun to wonder which hedge fund on Wall Street is dumb enough to play this game.  If Teamsters really want to be taken seriously on Wall Street, they should start their own hedge fund and try to come up with even dumber trading strategies.  It's not hard at all to be dumber than the Street. 

Full disclosure:  No position in YRCW.