I don’t know if I should find this as funny as I do. It’s one of those stories that you check twice to make sure The Onion didn’t write it. Some poor sap decided he was a seasoned, savvy Wall Street trader and thought it would be smart to load the boat shorting micro cap biotech stocks. With small floats. Overnight. With half his account. That’s like playing Russian Roulette with five bullets. Anyway, to protect his identity, we’re going to call him Piker McPikerson. Nah, Gordon Wrecko. With a W.
Mr. Wrecko thought it would be smart to short overnight because he quote “was holding Kalobios short overnight for what I thought was a nice $2 fade coming.” Now, I like to talk about biotech stocks and I use the phrase, “Sometimes you come in on Monday and the mice are all dead.” Basically it means, something goes haywire and the stock blows up. In Mr. Wrecko’s case, the unthinkable, well, actually I shouldn’t use the work think to describe anything Mr. Wrecko did. So, something crazy happened overnight. And this is where the story gets even better.
Turing Pharma CEO Martin Shkreli, the most infamous man in biotech right now, comes in and buys 40% of the float. That’s right kids, the same Martin Shkreli who got Hillary Clinton in a rage over his buying up of an AIDS drug and cranking up the price from $13.50 to $75 a pill overnight. Do you know how hard it is to set off Hillary Clinton? Bill came close, but no cigar. Martin Shkreli, the biggest dusenburg on Earth right now, and the posterchild for everything wrong with Wall Street. The guy who went on CNBC and whimpered his way through an interview. Yes, that guy.
But come on. You mad bro? Why are people upset with Shkreli? Because he’s successful? Because he’s smart? Shrewd? Knows how to make money and add value? It’s easy to look at the headlines and get all up at arms but trust me, there’s a lot more to economics of what he did than that. I’m not saying he’s a saint. But neither am I. And I’m pretty sure neither are you. Shkreli, you’re good with me playboy.
Anyway, so Mr. Wrecko’s short went against him to the tune of 800%. Eight. Hundred. Percent. Forget waking up with the mice being dead, the laboratory set off a chain of explosions creating a nuclear holocaust. Mr. Wrecko’s account value now, negative $106,000. Now the guy has kicked off a go fund me account to try and get him some money back. Do you think he would have donated his gains to someone else’s gofundme account if he made money? Nope. I feel bad for him though. Like I feel bad for those soldiers that gave that chimpanzee a loaded machine gun. How much you wanna bet the guy never had a broker because he thinks stock brokers are idiots? Mr. Wrecko, come on over to Zacks. I’ll personally guide you along your trading voyage. Or, if you decide to do it on your own, I guess it’s straight up or sideways from this point. I’m rooting for you either way.
There’s a valuable lesson here. You can take a mulligan when you’re playing golf at the 9-hole par 3 course at the community center, but not when you’re trading stocks. Don’t let this story turn you off from shorting stocks. That’s like letting pictures of accidents turn you off from driving fast or allowing those slides from Health class in high school to send you to into celibacy.
Short companies with horrible earnings history, negative earnings estimate revisions, and are too big to get bought out by a hedge fund. Problem solved. Kalobios Pharma doesn’t even have a Zacks Rank. You should look for Zacks Rank #5 (Strong Sell) and Zacks Rank #4 (Sell) stocks that are still approaching highs in the market. This way, you may know something that other people don’t, and that’s where you’ll make money.
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