I absolutely love what’s happening to CREE right now. If you are following the situation, you know the stock has not traded well in the last week. The naysayers are out in full force, and they have the publicity machine fully geared up.
Last week, a rather obscure analyst published a sell recommendation on CREE, citing the company’s struggle to sell its products.
The stock swooned to about $28 for a day, and then rebounded to $29 the following day.
I don’t necessarily find fault with the analyst’s viewpoint. Perhaps sales will flounder a bit while we are waiting for adoption.
However, on Friday, I saw one of the most transparent pieces of journalism I have seen in some time. Barron’s, a widely recognized shill for short sellers, published an article bashing CREE, and citing the analyst’s report for all the reasons the stock should be in the teens.
Author Mark Veverka simply spews out a regurgitation of the analyst’s point of view, and embellishes the whole story. The bottom line- the short sellers who are short CREE didn’t get enough of a drop from the report, so a follow up article magically appears in Barron’s. CREE happens to be a very heavily shorted stock, shorts are looking for ways to bash the company.
Here’s where the whole thing loses credibility. Analyst Dorsheimer, and Barron’s author Veverka both claim GE will never buy the company. Here’s my question for you- How would either one of them know that? I feel comfortable making the assumption neither GE or CREE is telling these bozos what’s going on behind the scenes, and therefore they cannot know. I don’t have any idea if it’s going to happen, and moreover I can’t find out.
The shorts are upside down in this one. Today’s reversal is killing them, and the smear campaign could continue. Here’s today’s late chart:
Sorry the chart is a little busy. Look at today’s sell off and reversal. We traded all the way down to $26.43, and are now trading in the $29.50 range.
Could the analyst be right? sure, numbers could be weak. Are you ready to buy a $25 light bulb, even if you knew it would save you a substantial amount of money in energy and replacement cost?
Keep this in mind. No matter who makes the bulb, they will be using a CREE chip. So, when the get the price down to $10 to $12, and everyone wants the bulb, you will be paying a lot more for the stock.
The shorts have given it their best shot, and the stock is coming back strong. It’s a strong buy.
Comments and questions are welcome.
Mark,
Your statement “GOD BLESS THE BROKERAGE ANALYST who has the guts to recommend that his clients sell a stock. And we’re not talking a Hold that smells like a Sell, either. We’re talking a bonafide Sell.” -REALLY!
If you had checked into Jed Dorsheimer’s track record on CREE you would had known that his clientele NEVER were told to buy CREE, except for 11 days, 4 years ago. His stongest recomendation since that time has been either a hold or a reduce recomendation,with much lower price targets.
But he has always been telling clients to sell CREE, even with a hold recomendation and has consistently been low on his earnings estimates and price target.If you had checked you would had knowen that JED has had for the last 4 years, an adversative relationship with CREE.
Here is his track record:
Jed started coverage of CREE on July 19th 2003 with a buy, stock price $16.
Eleven days later 7/30/03 after inviting CREE to his conference on LEDs, he downgraded CREE, the price $13.50.
BWI CREE cancled their acceptance to his conference.
On 9 June 2004 he futher downgraded the stock, the price $20
ON 26 July 2005 he upgraded CREE to just a hold, but a $18 price target, stock price $29.22
Now on Oct 3rd 2007 he downgraded the stock, price $32.50
His earning estimates were always low and below the reported results.
He has always recomended to his clients that CREE should be sold, except for 11 days in July of 2003 and even then he was wrong.
Lastly, since Jed Dorsheimer has looked so bad with his clientele with CREE and his shorts getting killed, do you really think it took guts to put out a sell- give me a break! His relationship with CREE is about zero!
It also would of been fairer to balance your report with some other views like CIBC and Amer Tech which still recommend CREE and take great exception to Jed’s very biased report.
Please don’t pigeon me as one of those fanactical types, these are the facts.As to the merits of CREE, you should have accessed some of the reputable coverage on CREE, before your wrote your one sided hatchet job!
Editor: So, I guess we are in agreement that the Barron’s article was a very transparent shill for short sellers. Thanks for sharing that 411.
Are you still hot on Cree? Any reason why the shorts are all over it in a bad way?Numbers weent that bad and they are cash rich now. Could it be a possible takeover and do you still have a 50.00 target for next year?
Editor: Yes. I know CREE is a very controversial stock. Investors either love it or hate it. However, LCD lighting is coming, and they own the chip that has to go in every LCD bulb that will ever be made. The cost will go down 50% every 18 months, and eventually there will be massive adoption. For now, you have to put up with the controversy, and buy this one when it gets cheap.