| To: Math Junkie who wrote (11587) | 1/13/2001 8:19:33 PM |
| From: Rillinois | Read Replies (1) of 42809 |
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Brinker and OnTrak Systems
Brinker recommended ONTK for the first time in his September 1995 issue of MarkeTimer. It was labeled as a "SPECIAL SITUATION STOCK RECOMMENDATION". ONTK had "developed a unique new technology" and their Chemical Mechanical Planarization (CMP) polisher was scheduled for beta site testing in December. Brinker laid out that "the key to ONTK's 1996 stock price performance will be the ability to perfect and deliver their new polisher" in 1996.
ONTK had just gone public at $17 in July of 1995. Brinker recommended purchase of ONTK under $29. The issue dated September 4 priced ONTK at $27.275. No sooner than 2 days later ONTK vaulted to as high as $31 1/2 before closing at $30 1/4 no doubt on the Brinker effect. ONTK went as high as $34 3/4 the next five days, but it immediately came back down to earth.
Not sooner than the next months issue (Oct.) Brinker was forced to start the spin machine early. The stock had come down to $25. Apparently, two executives of the company involved with CMP had left the company and the stock reacted negatively. Not to fear though, Brinker believed "this management shakeup has created a buying opportunity" and he maintained his rating of buy under $29. In fact, he teased readers by speculating that earnings could even double in 1997.
November's issue was a classic. ONTK priced at $19 became a teenager and Brinker had a 33% loser in just 2 months. This prompted Brinker to speak with the Chairman of ONTK. He assured subscribers everything was O.K. and the much anticipated beta test was due shortly. Brinker expressed his confidence that ONTK would meet his earnings estimates and proclaimed that ONTK could be a "big winner". Having said that he reiterated his buy rating and commented that he finds "the shares particularly attractive in the low 20's range". (Uh-oh, I think we've seen this story before...)
With December came the long awaited beta test. It was labeled a success and Brinker reiterated his buy rating even though the shares were now $17 1/2. January brought the first signs of Brinker blaming something else for his misfortune. Brinker excused the drop in the shares as industry related and not company specific. (Pointing the finger seems to be a hallmark of any failed Brinker recommendation.) He reiterated his buy. The shares started the year at $15 1/4.
In the now infamous February 1996 issue, Brinker again reiterated his buy on the stock even though the company had to push back sales of the new polisher to the first half of 1997. (Have we heard this one before too???) The stock closed at $13 1/4 on February 2, but not before touching $12 earlier in January. So it seems that despite reiterating a buy at $13 1/4, many subscribers were already underwater by more than 50% by this point. Undoubtedly, the constant reference to this recommendation as proof that ONTK was a winner for some certainly "creates a false or misleading impression" to those that are unaware of how Brinker actually got to this point.
In March, Brinker all but threw in the towel. Taking advantage of the first month the stock actually closed higher since the initial buy recommendation, Brinker downgraded ONTK to a hold and pushed back sales of the new polisher to the second half of 1997. (This is all too familiar...It's like everything you read is true, but the stock's name has been changed to protect the credibility of your editor and MarketTimer.) ONTK went as low as $11 1/2 on April 12 down over 60% from his original buy point.
Interestingly, after the downgrade ONTK managed to crawl back to over $28 by June. Brinker explained in the June issue that the Vice-Chairman of AMAT resigned to become Chairman and CEO of ONTK. He regarded "this management change as positive" for ONTK. His positive comments correlated perfectly with another top in the stock. By the next month ONTK was back down to $16.
For the rest of the year, Brinker kind of put ONTK on the back burner. Not a lot of new updates or information, just the same old hold rating. (ie: He refuses to admit it was a loser so he'll just wait indefinitely and pray for something to come about.)
In February of 1997, Brinker got excited about the potential of the CMP polisher again and upgraded his opinion to buy under $22. He reasoned, "this upgrade is based on improving fundamentals for this emerging growth technology company into the next year". The shares were priced at $21 3/4 in the newsletter dated Feb. 2. The shares rose above $22 by Feb. 4 so it's debatable whether many people were able to buy under $22. He followed up the next month with the same opinion to buy under $22 without any commentary. There was pretty good support at $22 throughout February and the first week of March no doubt due to the Brinker effect, but a close look at the chart shows that after Feb. 4 there were only 2 days (Feb. 14 and Feb. 18) where the low for the day was $21 7/8. Presumably the BID hit $21 7/8 and not the ASK so again one can debate whether or not many people got filled under $22.
In the April issue, Brinker announced the plans of Lam Research to buy OnTrak Systems. In classic Brinker style, he reminded subscribers of how he had upgraded ONTK just two months ago without reference to the initial recommendation in September 1995. He also found the need to opine that indeed the shares of ONTK "traded considerable volume in the $22 area". Obviously, this was an attempt to thwart any comments that subscribers did not get filled on his latest recommendation.
As a result of the takeover, Brinker recommended sale of ONTK at $30. On April 7, ONTK ran into a ceiling of Brinker sellers at $30 and for some reason the stock tanked to as low as $19 a week later. Fortunately for Brinker a favorable earnings report lifted the stock back up to the $25 area by the end of April. Recognizing the fact that many subscribers were not able to get out at $30, (and probably losing faith that ONTK would be able to get back up to $30) Brinker revised his sell recommendation to $28 or better in the May issue.
Sure enough ONTK breached the $28 area the next day. However, Brinker's inability to catch a break when it comes to stock picking didn't end there. ONTK crossed the $50 mark just three months later in August. Oh well…
Best Regards.
Rillinois |
