Offshore hedge fund Laureate BVI predicted in January a drop of 50% in Twitter’s stock price. The fund has now advised investors the collective scheme will close the position securing a massive 54% return in 5 months.
Beverly Hills, CA -- (SBWIRE) -- 05/09/2014 -- Laureate BVI issued a Sell rating on Twitter when the stock was trading at US$69 and predicted the stock will drop to US$27.50 in a research note issued on Friday 03/14/14.
Laureate has advised investors the collective scheme will close all positions on Twitter (TWTR). The fund trades put and call options to create an absolute fund in order to protect it's investors from excessive market volatility.
Peter Tasca, CEO of Laureate BVI states, “As an absolute return fund we aim to produce positive returns regardless of the prevailing market conditions. We see more trading risk in maintaining a bearish position in Twitter (TWTR) because this company could very easily become an acquisition target for Google (GOOG) after such a severe drop in market value”.
Shares of Twitter (NASDAQ: TWTR) the micro-blogging service are currently trading at US$32.45. Twitter (TWTR) has a low of US$29.51. and a high of US$74.73. The stock’s 50-day moving average is US$46.61.
Other factors causing the stock price of Twitter (TWTR) to be depressed is the lockup expiration. The microblogging service’s share price has tumbled 17.8% in one day.
According to CEO Peter Tasca of Laureate,” Twitter currently has 470 million shares owned by insiders and large institutional investors that are now eligible for sale. We believe the current stock price reflects the discount created by the lockup expiration”.
Laureate market research notes, Put Options on Twitter have shown significant volume but the upside to the trade is very limited and does not show significant opportunities.
Tasca states, "the stock still trades at 18 times its estimated sales which makes it more expensive than LinkedIn and Facebook but when you have a stock weighted on hope and expectations it does not always trade according to fundamentals which makes it difficult to predict movements”.
Laureate reports that the demand to borrow Twitter to short is very strong. The trading data shows that over 70% of the shares that can be borrowed from lending programs are loaned out. “It is very difficult to find shares to short” according to Tasca.
According to Tasca of Laureate BVI which has returned 23% in net profits for 2013, “we rate this stock a sell due to valuations, we do not recommend any shorting or buying of puts at this time due to the limited supply of stock and the substantial risk.”
About Laureate Trust
Laureate Trust provides expert portfolio management that achieves optimal results. The proven trading strategies are based on four principles: diversification, technical analysis, trend following and risk management, which combined have the potential to profit from any economic situation. In 2013 this multiple platform strategy returned +23.01% net of all fees.
In 2014 Laureate launched a Referral Fee Programme that will pay 2% commission of the initial deposit and then a management fee for the life of the account. “We want our partners to benefit from every bit of success they help us generate” said Tasca.
For more information on Laureate Trust, contact Private Client Group +1-310-492-5301.