Sunday, February 09, 2014

Bought Twitter on the dip

Thank you, baboons of Wall Street! I had only a small position in Twitter (TWTR) that I bought at the open on IPO day and had been patiently waiting for a big pullback. The baboons of Wall Street (AKA traders, short sellers, hedge fund speculators, et al) finally granted me my wish. We're still not past the initial 90-day restricted stock lockup expiration, which kept me from buying on the initial dip from $72, but I bought enough shared to double my holdings a couple of hours after the open on Thursday at $51.76, a discount of 31% off the recent peak price of $74.73 on December 26, 2014.
 
That said, this was only another modest purchase. Sure, it doubled my TWTR holdings, but that only brings it up to my usual holding size for random holdings, not an outsize position such as I hold with Facebook (FB).
 
It is my intention to eventually ramp up to an outsize position in Twitter, but it still feels too early. I don't expect the absolute rout that Facebook experienced, which let me acquire shares at less than half of the IPO price, but there is the 90-day restricted stock lockup expiration coming up sometime this month, as well as the 180-day restricted lockup expiration coming up in May. In truth, I don't expect a major amount of selling due to either lockup expiration, but it is still possible, so I am prepared.
 
Also, I think it will take Wall Street another quarter or two (or a lot more!) to gradually get used to Twitter's business and prospects.
 
In short, I'm still sitting on a fair amount of cash, including my 2014 retirement account contributions (ROTH and SEP-IRA), a good chunk of which I expect will go into Twitter.
 
-- Jack Krupansky

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