By Monday’s close, shares of the Chinese auto parts and imported luxury vehicle wholesaler China Auto Logistics Inc. (CALI) leapt nearly 89 percent to $5.21 per share, leading all gainers. While the percentage increase is a remarkable one, what is perhaps more interesting is that this is the second stock in about as many weeks to make a dramatic single-day gain on little or no events of significance involving the company.
On February 21st of this year, shares of the biotech company specializing in genetic testing services CombiMatrix (CBMX), had shot up an incredible 144.75 percent, to $7 per share, before closing at $6.75. As was mentioned on this website, scant information was available about CombiMatrix, other than the promise of an upcoming fourth quarter earnings report, as well as a small bit of information from the Orange County Business Journal that attributed the jump entirely to an article on the Seeking Alpha website, authored by a gentleman under the pseudonym “Biotech Breakthroughs”.
The same author published a piece today in which he claimed to be making a brief digression from his focus on biotech, to talk about China Auto Logistics, whose shares “are in a remarkably similar position as I write this article.” Citing a strong performance at the beginning of the year, the author argued that CMBX’s earnings report would be an “Imminent Catalyst” , sparking a “breathtaking rally as this news flow hits the tape”.
CMBX’s shares have since lost over half the gains they made that day (they closed today at $3.18). When it comes to Chinese Auto Logistics, the author makes an identical argument- namely that the company’s shares soared after a Q3 earnings report, and that the Q4 earnings report, to be released in the near future, will act as the same sort of “imminent catalyst”.
While “Biotech Breakthroughs” provides a discernible thesis about why CALI might do well in the near term, as well as long term, this thesis seems to be, just as it was in the case of CombiMax, predicated first and foremost on the anticipation of a strong earnings report, and the subsequent market reaction.