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Category: Business Parent Post

Originally posted on Seeking Alpha by Private Trader as an Instablog on Jan 23, 2014 


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False And Misleading Headline From Street On Netlist (NLST)

The lowest analyst price target for Netlist is 2.25. I'm long, I think Netlist is undervalued even at $2.25 per share and hope Seeking Alpha will allow me to publish a longer article explaining why soon. Meanwhile, in my opinion, at prices well below that, (at appx $1.32) Netlist shares present investors with a buying opportunity.

Netlist investors should know that an article, published by The Street, written by Shawn Ingram, dated 01/17/14 - 01:20 PM EST has false and misleading information which may cause, or have caused, additional downward pressure on Netlist.


The article needs to be corrected on the following points:

1. The headline "Why Netlist is Falling Today" is false and misleading.

2. The first sentence: "...Netlist (NLST) fell 3.9% to $1.25Friday after winning a patent reexamination appeal." is false and misleading. The improper spacing has been left intact.

3. The truth is that according to both Yahoo finance and Stockcharts.com, Netlist rose 1.54% on extremely high volume. This was the second day in a row that Netlist had risen.

Although a correction won't help investors who see the article over the weekend, and decide to sell at open, it might help explain why Netlist may have a hard time gaining traction for the next few trading days. Due to the size and volume of the stock involved, I hope The Street not only issues a correction but also investigates the trading accounts of the reporter and his friends and family.

Since Netlist is a small company and often trades relatively few shares per day, the publication of false and misleading information could benefit some investors at the expense of others.

False and misleading information may also aid day traders (as thinly traded stocks are easily subject to manipulation and volatility). Netlist longs may want to brace themselves for continued volatility over the next year. During this time, Netlist is poised to rebuild low sales and income figures by negotiating settlement and royalty payments from patent suits. Also, to better it's long term bargaining position, Netlist managements should consider issuing additional shares. Though dilutive, such a move is likely to benefit investors over the longer term by ensuring Netlist is well financed for continued legal battles or settlement negotiations. Long term Netlist investors should be wary of false or misleading headlines from The Street!

Disclosure: I am long NLST, .

Additional disclosure: I am here to exchange financial and trading ideas, and am not qualified or attempting to provide financial counseling or advice. Please do your own due diligence. I do my best, but I have been wrong before. Please follow my comments to see some of my past thoughts, trades, or track record.

Tags: NLST, Small cap, technology, semiconductor, chips


Comment posted on 1/24/14:

Author’s reply » Today Netlist longs should expect netlist to go down with the general market. However, don't be shaken out. Don't sell your shares cheap... No reason to give your money away. Netlist's CEO bought shares at 4.29 each. He has no reason to let the company be acquired cheap. It will take time, but he has incentive to rebuild the share price. More recently he has the legal wins to help him do so.

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