Catch a Falling Knife? Green Mountain, Chesapeake Tempt Investors |
| CNBC.com - May 3, 2012 |
Recent violent drops in stocks such as Green Mountain [GMCR 25.55 -23.97 (-48.4%) ], Chesapeake Energy [CHK 17.02 0.28 (+1.67%) ] and Netflix [NFLX 76.15 -6.08 (-7.39%) ] are tempting value investors to go against one of the oldest sayings on Wall Street: “Don’t try to catch a falling knife.”
“In buying falling knives, you have to distinguish between just setbacks and atrophy of business model,” said Stephen Weiss, hedge fund manager at Short Hills Capital Partners and veteran of Street research and trading desks.
In the latest example, shares of Green Mountain Coffee Roasters lost almost half of their value at their low Thursday after the maker of Keurig brewers and K-cups missed results and aggressively cut their sales outlook. The selling picked up following a conference call where executives seemed unable to even find an actual reason for the revenue shortfall.
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- Posted: 2012-05-03 12:11:34
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