Strange Price Pattern of KLXI on 9/8/2015

I noticed stock KLXI had a very strange price chart today, see below chart.

There are two abnormal observations:

  1. There were some block activities around 10:40 AM
  2. After that, the price hovered over very tightly around $39 for almost the rest of the day

KLXI_20150908

Such a straight line pattern usually can happens in short period, where a big buyer or seller had a large order placed at a limit price, absorbing all the liquidity on the other side when the price is coming into that person. In KLXI’s example, the stock went up from 38.5~ to 39~ in the first hour and seemed to hit a resistance level after the block/s. In other words, this pattern looks like a big seller sitting in a bull run, however I find it is very confusing. Nowadays, how could someone uses limit order in such a unsophisticated way? This is like shouting out to everyone else that I got a huge position to get out of.

I hope I could find something more from tick data.

Shoulders of Giants – Whitney Tilson’s lesson from World Acceptance Corp. Short

Short ideas are harder to implement than longs, as you need to pay interests to maintain the position. On the other hand, market can stay wrong longer than you expect, causing both loss of the position and  shorting interest costs. Tilson’s story with WRLD shows how important a catalyst is for a short position. For influential active investors, if there is no catalyst, they can create one by publish some 100+ pages presentation (David Einhorn’s Green Mountain Coffee short, and Bill Ackman’s Herbalife, for example). For others, I think Tilson’s advices are very valuable: if you believe in your thesis about a short, start your position small and keep following the name, wait for a catelyst and you can double up.

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