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Fishermen on the Boulogne sur Mer based trawler "Nicolas Jeremy" raise the fishing nets, off the coast of northern France September 23, 2013. (PASCAL ROSSIGNOL/REUTERS)
Fishermen on the Boulogne sur Mer based trawler "Nicolas Jeremy" raise the fishing nets, off the coast of northern France September 23, 2013. (PASCAL ROSSIGNOL/REUTERS)

Schizas’ Mailbag

Bottom fishing this venture fund stock is a dangerous game Add to ...

Hi Lou,

Your thoughts on TINY please.

Thanks,

Rick

Hey Rick,

Thanks for the assignment.

Harris & Harris Group Inc. operates as a venture fund that invests in private start-up companies and new technologies. Management is focused on long-term capital appreciation instead of income generation. If that’s the mission then it demands an extraordinary amount of patience and nerves of steel. When you invest in these sorts of companies there are tons of risks because of the early stage nature of the funded enterprises which generally spend most of their time developing a product. Can you say burn rate?

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An survey of the charts will help inform my opinion on TINY.

The three-year chart indicates that sellers have been in control of this company since late July of 2011 when it traded for $5.50. There is an established downtrend line that has provided resistance to every attempt to reverse the selling. There have been a number of opportunities to trade TINY for profits on short bursts of buying that have resulted in aggressive moves higher. However capturing those profits requires constant monitoring and good execution.

Another factor to consider is liquidity. The stock has traded an average of 88, 390 shares a day over the last 30 day which indicates potential problems getting out if you get in. Finally the question arises as to how successful the management team has been in picking candidates for its fund. In technical analysis it is said that in the price there is much knowledge. With that in mind I think the assessment is that buyers have lost faith.

The six-month chart illustrates the resistance along the 200-day moving average that came into force in late November which was indicated by the sell signals generated by the RSI and the MACD. Currently the momentum indicators are signalling that sellers are still in control.

I get the sense that you are bottom fishing this stock. The research conducted on your behalf doesn’t support a buy but has identified the opportunity to trade TINY for short profitable trades along the downtrend.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

 
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