12:30pm (EST) In August, we listed a group of IPO’s that were coming out and in September and many of them have made their debut. From September 25th (quotes are from that day): “There were a number IPO’s (Initial Public Offerings) yesterday and quite a few secondary offerings. This week’s IPOs have been the most since 2007, and today, Shanda Games (GAME, $11.93, down $0.57) got initiated on the Nasdaq. The other IPO’s that went public this week include: A123 Systems (AONE, $19.00, down $1.29), Artio Global Investors (ART, $26.69, down $0.56) and Colony Financial (CLNY, $19.39, down $0.11).” (END) Well, out of the group, A123 Systems (AONE, $24.63, up $0.11, current price) is the one we want to start watching…like a hawk. Its 52-week high is $28.20. A few things we like to see is volume and volatility and this stock has both. The average daily volume is over 5 million shares and the option pits are pretty liquid. The company makes lithium-ion batteries and had high hopes over a year ago as they thought they were closing in on a Chevy Volt contract but eventually lost out. However, they signed a deal to supply Chrysler with batteries for its cars. And the market for these types of batteries is HUGE. Besides cars, think smartphones and other products…every iPod, iPhone and Apple laptop has a lithium-ion battery. The “new” battery is smaller, more energy efficient, longer lasting, and are effectively replacing the previous generation of nickel metal hydride batteries. Of course, there is competition in the space but with other car manufacturers joining the race for electric cars, and the transition over to these batteries have dramatically improved the potential market. However, many other would-be competitors have not even begun mass production yet which will play into A123’s hand once demand starts to peak. A123 will likely play a big role for temporary energy storage for utilities and they were recently awarded a $250 million grant from the Department of Energy to build a manufacturing plant. On the negative side, the stock could see some selling pressure once their “lock-up period” is up. Typically, when a company goes public, its insiders can’t sell their shares for a certain period of time which is usually 90 days to a year. If a company is full of smoke-and-mirrors or has some skeletons in its closet, company insiders who know about them can’t act on this “inside” knowledge until after the lock-up period has ended. They will start to sell stock before the public learns of any bad news hoping to get out at the top. Now, I’m not saying A123 is shady or anything, I’m just explaining how the IPO market works. A123 appears to be a boom or bust company and from the way it has been trading it has become clear there is action in the stock. The key for us will be to watch for an opportunity to get into some options. We might go long, we might go short, or we might do a straddle or strangle trade. However, we have to wait for our opportunity. Keep this one on your Watch List and when we see a trade, we will alert our subscribers. The market is slightly higher at the halfway point. The Dow s up 31 points to 10,072 while the Nasdaq is up 10 to 2,174. The S&P 500 is at 1,096, up 5, and remains within spitting distance of 1,100 which was hit Monday. As far as our current trades…thumbs up! Imax (IMAX, $11.24, up $0.14) continues to push new 52-week highs and our option trade from August has now reached a double. We still have high hopes for the stock and have a $15 price target on the shares. However, the options we are following will yield another double from current levels if Imax reaches $15 by March 2010. If you are not a current subscriber, you can quickly become one and get our updates as soon as you signup. Our Members Area is updated every morning with the CURRENT TRADES and are emailed instantly to your email inbox.]]>
