Sun Times Media (SVN) Stock Gamble Update

So apparently, the dead-cat bounce of SVN stock is continuing. Despite a lukewarm news story today about how they are going to be doing in the coming year, their stock price shot up today. This counteracted the downward trend seen since Monday.

In my fictional stock buy, I was able to sell 2000 shares of SVN at $1.50, locking in about $700 or so of gains. This leaves me with 13000 shares that I purchased at a mean price of $1.12. I believe I will attempt to sell 3000 of my shares when the price hits $1.60-1.70. I will attempt to sell another 3000 shares when the price is greater than $1.75; I will not attempt to unload the rest of my shares until the price hits my original $2 target.

If I was playing with real money, I would attempt to have all of my money out of the stock before it hits the $2 mark, and only keep the position that the stock created for me. Even more likely, I would have pulled out all of my money by now due to the low amount of capital I would be willing to put towards this bet especially with the specter of multiple commission fees haunting me.

If I had invested $1000 worth of real money in this stock at the $1.05 price point, I could have sold today at the high of $1.51 and made about $400 after commissions. However, once again the reason I did not put real money into this is because it is a straight-up gamble. This should not strictly be considered investing. You can go here to Adam Dada's site to read something that echoes a lot of my own thoughts on the matter.

It is possible that this stock does represent an excellent opportunity for investors, because of the special situation that is occurring, but it's nearly impossible to tell. The outlook seems okay for the next year, and I would imagine that the major stakeholders in the company are pushing for at least a couple dollars worth of raise in stock price before they would let it get bought out. I wouldn't bet on it though. I see this strictly as an opportunity to make some quick cash, and the chance to buy at the sweet-spot seems to be fading fast.

I would not recommend that anyone put money into this stock unless they perform the needed due diligence and they come to the conclusion that this stock is an excellent value buy over the long-term. The closer this stock gets to the $2 mark, the more likely I see it rebounding back very quickly. It's entirely possible that the strategy the management team is supposed to unveil in the middle of January might be a breath of fresh air. I would imagine there will be a bounce in the price around that point as well. This is probably the earliest point I see the stock hitting my $2 target. More likely the stock will be around $1.70 at that point, as long as people still see it as a value stock or speculation buy.

Amusingly, since I originally suggested to my co-workers that they buy this stock, it has appreciated nearly 40%!