Today let’s look at two bearish additions in the form of a short sale and an ETF.
In his Opportunistic Arbitrage model Mark Holder takes advantage of opportunities he sees in the market. This includes investing in sectors that have been beaten down. This week, Holder sold short shares of Amazon.com Inc (NASDAQ:AMZN). With a high price to earnings ratio, the e-reader price and development war heating up and Amazon coming under fire for releasing questionable statistics regarding its e-book sales, it will be interesting to see if Amazon’s stock price drops in the coming weeks. Amazon’s stock price shot up from a closing price of $93.45 on October 22nd, 2009 to a closing price of $118.49 on October 23rd, 2009 after they announced a 69% increase in profits for the third quarter of 2009. Since then their stock has drifted from a low closing price of $108.61 on June 29th, 2010 to a high closing price of $150.09 on April 22nd, 2010.
Next, Covestor model manager Top Stocks for the Week bought ProShares UltraShort Financials ETF (SKF) for their Top Internationals model. In this model, the manager invests in international top performing companies with impressive earnings and sales growth, low debt-to-equity ratios and strong balance sheets. SKF is an ETF that attempts to perform at 200% of the inverse of the Dow Jones U.S. Financials index, which has never recovered its 2007 highs. As of the date of this post, the fund is trading just below NAV.
