Sunday, November 18, 2012

Low Float Volitility

Last week, CALI more than quadrupled after releasing an earnings report that boasted, "Luxury Auto Sales Propel 78.3% Increase in China Auto Logistics 2012 Third Quarter Revenues". If you took the time to read a little bit closer, you would notice that net income actually declined when compared to the previous year. CALI only has a float of approximately 2.05M shares, the result of a recent 1-for-6 reverse stock split administered for the following reason: "The primary objective of the Reverse Stock Split is to maintain the Company's listing on Nasdaq by regaining compliance with the minimum bid price listing requirement." Low float stocks can have some wild price swings when a catalyst brings interest to the stock. InvestorsLive was able to make some nice money trading CALI on the short side.
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