Investing in Rumors: Hey Buddy, can you pull the knife out?
By Ian Cooper
It’s just unbelievable how gullible some analysts can be. Instead of doing required due diligence, one analyst sparked a rumor that sent shares of BRLC down $1. While you and I (being smart investors) would’ve questioned an absurd rumor before passing it on… not this guy. Yep, instead of investigating and asking questions to the contrary, the analyst reportedly said he received information from Syntax-Brillian Asian rivals and just passed in on, according to a SeekingAlpha.com article.
But once Syntax-Brillian (BRLC) pulled the knife out of its back, plunged in deeply by BRLC competitors and a now red-faced analyst, it was off to the races for BRLC shareholders. The rumor - allegedly sparked by Asian competitors said Circuit City would no longer sell the company’s Olevia. Any smart analyst would’ve been quick to validate such a rumor prior to the dissemination of such news.
Fortunately, says BRLC’s CEO Vince Stilleto, (according to Reuters.com), “I'm really quite surprised that he would say such a thing based on some rumors he got from a third-tier Taiwanese manufacturer that claimed Circuit City plans to replace our products." In fact, BRLC has no intention of ending that Circuit City relationship, which contributes to 10% to 15% of sales. Plus, says a SeekingAlpha.com article, “Not only were the rumors false, but bow we are learning that Circuit City is actually increasing their Olevia SKUs.”
Take Care-
Ian L. Cooper
Early Alert Trader
| |