backtop


Print 21 comment(s) - last by ThePooBurner.. on Apr 20 at 3:31 PM


The Palm Pre Plus is now only 1 penny, with a new two year contract, via Amazon.com.
Buyers can get a free Pre Plus with 2 year contract on the Verizon network, from Palm

Hedge fund manager and former star hockey player at Harvard University Philip Falcone revealed in a regulatory filing on Tuesday that he had taken a 9.48 percent stake (16 million shares) in mobile handset maker Palm.  Falcone is known as an activist investor with his share of ups and downs.  In 2007 he became famous when he bet against subprime mortgages and his funded doubled.  In 2008, he reportedly posted a double digit loss after betting wrong on oil prices and being unable to short sell certain stocks thanks to new laws.  In 2009, though, he recouped posting a 45 percent gain.

After the announcement of Falcone's stake, Palm share jumped 10 percent, then settled down to a gain of 3.1 percent.

Palm can use all the help it can get.  Its stock is in shambles and it has a huge backlog of unsold handsets, which took take over a year to sell.  Palm's production is currently halted and there's no new handsets known to be in store for the second half of the year.

The company is resorting to fire sale tactics on the Verizon network, selling its Pre Plus smart phones at two for $49.99 and its Pixi Plus smart phones at two for $29.99 thanks to a price drop and Verizon's "Buy One Get One" promotion.  More incredibly, on Amazon.com you can get a single Pre Plus handset for $0.01 (the phone retails without contract for $699.99).  That phone also comes with free 3G hotspot capabilities (as do all Palm smart phones on Verizon's network).

Palm CEO Jon Rubinstein remains optimistic that the company will pull through this tough time.  The company has $590M USD in cash to weather the storm.  That cash also makes it an attractive acquisition target.  There's been rumors that Palm is looking to sell itself to the highest bidder and that HTC was among the interested parties.

Palm currently sits in fifth place on the smartphone market, behind Google, Microsoft, Apple and Research in Motion.



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

Going Long
By Oyster on 4/15/2010 10:31:22 AM , Rating: 2
It is good to see a tech site trying to cover financial information. However, it is also funny when it tries to speculate outcome based on what a hedge fund is doing.

This is a pure hedging (pun intended) strategy wherein the firm expects the firm to be acquired. It probably has access to some insider information, so it'll short the acquirer's stock, netting the spread between Palm's then magnified stock price and the acquirer's discounted stock.

Last thing DailyTech wants to do is accentuate the speculation, thereby, the spread, too...




RE: Going Long
By JasonMick (blog) on 4/15/2010 10:42:43 AM , Rating: 1
quote:
This is a pure hedging (pun intended) strategy wherein the firm expects the firm to be acquired. It probably has access to some insider information, so it'll short the acquirer's stock, netting the spread between Palm's then magnified stock price and the acquirer's discounted stock.


quote:
That cash also makes it an attractive acquisition target. There's been rumors that Palm is looking to sell itself to the highest bidder and that HTC was among the interested parties.


I think I make that pretty clear.

Obviously Falcone could either be betting on a turnaround or an acquisition. Either way the stock could rise substantially.

Of course if Palm stays independent by burning through its cash and continues to struggle, it will be a much less attractive target, even with its IP library. That's the risk of Falcone's investment.

quote:
Last thing DailyTech wants to do is accentuate the speculation, thereby, the spread, too...


I don't think that was the point here. Unlike the Reuters story on this topic that emphasizes the 10 percent gain, I point out that the stock only gained slightly. And I also analyze Palm's struggle in much greater depth.

Any intelligent investor reading this piece would realize that a position is a gamble hinging on either
a) An acquisition ...or
b) A turnaround
Either of which there is no guarantee will happen.

That all goes without saying, though, I believe.

Disclosure: I own no position in Palm or HTC.


RE: Going Long
By ThePooBurner on 4/15/2010 11:13:00 AM , Rating: 1
quote:
Disclosure: I own no position in Palm or HTC.

You don't have to have a position there to have stock in them or be a part of a mutual or hedgefund that does. :)


RE: Going Long
By JasonMick (blog) on 4/15/2010 11:16:06 AM , Rating: 2
Well I don't own stock in or hold any investments in hedge funds with major Palm holdings either...


RE: Going Long
By xmichaelx on 4/15/2010 7:31:24 PM , Rating: 2
quote:
You don't have to have a position there to have stock in them

He said he owned no position there, meaning that he owns no stock in them, genius.


RE: Going Long
By ThePooBurner on 4/20/2010 3:31:22 PM , Rating: 2
"Hi! My name is A Joke. You should really learn how to take me."


RE: Going Long
By alifbaa on 4/15/2010 3:21:57 PM , Rating: 2
Why would accentuating the spread necessarily be a bad thing? Why is "speculation" somehow evil?

If this hedge fund props up the stock enough for shareholders to get a better return, more power to them. If the hedge fund makes money, even (gasp) a lot of money, great.

So long as they aren't trading on inside information (as you groundlessly allege), how does this firm's investment do harm?

My point: The mere fact that a hedge fund exists and actively invests does not constitute social harm.


RE: Going Long
By mcnabney on 4/15/2010 5:50:03 PM , Rating: 1
You really have to understand what these goliath funds can do and how they manipulate a market.

If the buy a stock, that stock is going to go up.

If they short it, that stock WILL go down.

The best part is when they 'rent' shars of stock that your mutual fund owns in your name in order to complete a short. Your mutual fund makes money from this and depresses the value of your holdings. Isn't capitalism grand. The rich (or at least very large) do in fact control the market.


RE: Going Long
By alifbaa on 4/15/2010 6:45:18 PM , Rating: 2
Actually, I discussed how them buying the stock increased its price, thus protecting existing shareholders and strengthening the company's ability to survive or be acquired on more favorable terms. From the facts provided, it looks to me like all they've done is positive from the perspective of existing shareholders, employees and the company itself. The fund has certainly done more good for Palm than the management has!

Regarding funds moving stock prices, mutual funds, institutions, hedge funds and retail investors as a whole all move prices when they trade. Price manipulation can work over the short term, but has little effect beyond the day or two after it takes place and activity returns to normal. Everyone except retail investors do it, and the only reason retail investors don't is because they can't organize effective numbers.

As for the issue you raised of shorts borrowing stock, that's standard practice throughout the industry which in practice doesn't have nearly the impact you ascribe it to. If you really don't like it, trade your own stocks and disallow your brokerage from renting your shares. Otherwise, purchase funds from companies like Vanguard who returns their profits to fund-holders after paying their expenses.

Ultimately, whether it's hedge funds, institutions, or mutual funds the goal is the same -- to profit. They can only be relied upon to do so within the regulatory AND enforcement framework provided to them by the government. To the extent that their behavior is unacceptable, it's the government's problem, not theirs. We can all think of the managers as poorly as we choose (I know I do), but they're just doing what the government says is OK.


RE: Going Long
By CSMR on 4/16/2010 11:52:50 AM , Rating: 2
Normally this is a disadvantage to a large fund. If you want to buy a lot the price you have to pay goes up as i. supply and demand equate and ii. people adjust to the fact that someone thinks the stock is worth buying.

The advantage of being large and making big trades is you can place big bets and so maximize the value of any information you have.


RE: Going Long
By bobdelt on 4/16/2010 5:19:38 PM , Rating: 2
And that creates opportunity for others. If they're wrong, they lose. If they're right they win. No different than you buying or shorting stock. Just on a biggest scale.

And his 45% rebound is crap too. Even basic large cap funds have gains of 65% since the bottom of the market. It's not like these hedge funds are stealing. The only real why they can manipulate the market is by leaking information to the presses (which was NOT done here, it was a regulatory filing, which was required).

There is no fool proof way for hedge funds to make money, otherwise they'd never lose, and they do lose, lose big and lose often.

Just because these funds have a large amount of money, and you don't, and theyre looking to make more money, does not make them evil. Making money is not evil.


RE: Going Long
By CSMR on 4/16/2010 11:57:54 AM , Rating: 2
Yes it's funny.

Someone buys a stock and DailyTech struggles to give some interpretation of that.

What does DailyTech know about the meaning of this? Nothing more than the market because it's public information. The information is reflected in the current price of the stock.

If DailyTech wants to know how good Palm's position is in the eyes of investors, it should just look at the stock price. Trying and failing to interpret individual trades is silly; leave it to the market.


"Nowadays, security guys break the Mac every single day. Every single day, they come out with a total exploit, your machine can be taken over totally. I dare anybody to do that once a month on the Windows machine." -- Bill Gates














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki