While it’s great to have confidence in your longer-term investments, taking advantage of short-term turbulence is a supplemental strategy you can employ for some of your current holdings. So, just as you might diversify your portfolio, a diversification of your investment style might be warranted when a suitable situation presents itself.
This brings me to a specific scenario that we saw with one of our high conviction holdings, Information Analysis Inc (NASDAQ:IAIC), on Thursday, December 2. We didn’t pounce on it, but we immediately identified it as something that we like to call a “Raiser”, which I spoke about in a PodClip I put out on Friday. IAIC is an information technology company that we brought into our Select Long Disclosures Model Portfolios at a price of $0.47, with the current price of $3.33 representing a 608.5% gain.
Now, the term “Raiser” is not to be confused with any company actions, but more so the actions of a shareholder who owns a large chunk of shares, and has made the decision to sell those shares in a large block. Maybe the holder is desperate to liquidate for personal reasons, to raise funds for another investment, or is just spooked by the market’s volatility in general and wants to sit on the sidelines for a while. It’s hard to say, but it really doesn’t matter for the purpose of this observation and what you can do with it. The major point here is that once the seller fully exits his or her large position that was putting significant downward pressure on the stock, shares can rise for a nice day trade.
In order to take advantage of these situations , you need to watch the level 2 quotes to observe all the price action to get an idea that the downward pressure in the stock was being caused by a big seller and to understand when they might be done selling.
As for IAIC, we have been watching it closely or a few days because we noticed that there was some selling pressure on the stock by monitoring level 2 quotes, showing us that there looked to a big seller trying to exit a position
On Thursday, after we noticed that a big sell block if shares was gobbled up, the price of IAIC shot up in a violent way throughout the course of the day, hitting a 52-wk high of $3.95 before retracing to $3.34 by the end of the day. For a little perspective, the stock closed at $2.70 the previous day. So, now you can see the power of a Raiser. The volume spiked to more than 29 times its previous months’ average daily traded shares – 1.64 million shares! On November 21, 2021, the stock only traded 300 shares! Imagine all the algorithms that were triggered.
Some volume had been coming into the stock after its recent up-listing to the NASDAQ, which might have been the catalyst that the large investor was waiting for to exit his position, but again, the reason will remain a bit of a mystery, like other Raisers.
Keen observations with respect to IAIC would have flipped the green flag for a trade, if you had the guts to do so in this market environment. In a normal market environment, I do believe the stock would’ve shut up significantly more. I unfortunately did not try the trade this time, but I’ll be keeping my eye out for the next one, and I also plan on speaking about it in an upcoming Live Monthly Forum, maybe even tomorrow’s.
If you have any last minute questions, either respond to this email. You can also send an inquiry to firstname.lastname@example.org or from here at our contact form.
Topic: Open Forum | GeoInvesting
Time: Dec 6, 2021 11:00 AM Eastern Time (US and Canada)
Meeting ID: 822 4061 5802
One tap mobile
- +13126266799,,82240615802# US (Chicago)
- +19292056099,,82240615802# US (New York)
Dial by your location
- +1 312 626 6799 US (Chicago)
- +1 929 205 6099 US (New York)
- +1 301 715 8592 US (Washington DC)
- +1 346 248 7799 US (Houston)
- +1 669 900 6833 US (San Jose)
- +1 253 215 8782 US (Tacoma)
Meeting ID: 822 4061 5802
Find your local number: https://us02web.zoom.us/u/kegZW54QjQ