Why are BlackBerry and iRobot and even B&G Foods stocks appearing today

 

what happened

Wednesday looks (in turn) as if it will be another good day for some of the most watched stocks in the market. Blackberry (NYSE: BB), iRobot (NASDAQ: IRBT) and B&G Foods (NYSE) stocks are large Short selling: BGS) have been soared by the enthusiasm of momentum traders.

At 11:35 a.m. EST, BlackBerry shares were up 19.9%, iRobot was up 19.6%, and even B&G Foods (usually a rather dull producer of breakfast cereals and canned vegetables) also rose 15.8%.

So, what is the good news that drives these stock markets up?

Well, to be honest, the most important news in this group is bad news. This morning, Scotiabank analysts downgraded BlackBerry's stock rating to underperform. The banker unswervingly maintained his target stock price unchanged, but at a price of $8.50 per share, this still means that the downside of BlackBerry stock is about 60%. Although analysts believe that certain areas of the business such as security software have "potential", Scotiabank called the company's current stock price "too high" and recommended investments that profit from three times the stock price in the past two weeks Take action. Profit and count yourself lucky.

How to do

Scotiabank may provide similar advice to investors in iRobot and B&G Foods. Since January 13, when this momentum trader phenomenon on the "WallStreetBets" Reddit discussion board caused a sensation, the price of iRobot stock has risen by 69%. B&G Foods is a well-respected company with huge profits but net debt of US$1.8 billion, which also increased by 60%.

What do these three companies have in common? Despite varying degrees, they all suffer huge "short interest" on Wall Street-professional traders borrow stocks, hoping to buy them back at a cheaper price when the stock price drops, and then make a profit. In BlackBerry phones, the short-term equity is currently 7% (though not very high), but the short-term equity of B&G Foods and iRobot are 35.5% and 36.5%, respectively.

The more momentum a trader buys into these stocks, the more painful it is for professional investors to short stocks for short positions, and the greater the pressure on them to close their positions (for example, buying back borrowed stocks). Pushing up prices puts all other short sellers under greater pressure.

In short, this is why all three stocks are rising today. Anyone will guess when it will end.

Would it be advisable for you to put $1,000 in BlackBerry at the present time? 

Before you think about BlackBerry, you'll need to hear this. 

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