Hot Stock Tip...

As a rule I ignore advice from others with regard to “hot stock tips”. I don’t day trade my portfolio like some friends of mine. I’ve been burned enough in the past having rode two glamour stocks right into the bankruptcy court where a Judge cancelled the stock.
(A Florida Real Estate Conglomerate called “Radice” and “PBA Airlines” which still exists after emerging from bankruptcy but without me as an investor because all the equity investors lost their shares in the filing).
Five years ago on advice from an engineer friend I bought some stock in “Plug Power” a company on the cutting edge of “fuel cell research”.
I “researched” that one at the time and discovered on my own that it had a "$ 20 Billion enterprise value" according to Fortune magazine. Well it never recovered from the NASDAQ downturn and is worth 15 % today of what I paid for it…I confess to having bought additional shares of it earlier this year because it is so cheap and I can recover my loss if it only goes to half of what I originally paid it. Friday it began to move upward on news that the President’s energy bill had cleared one house of Congress.
Which brings me to the “hot stock tip” I received on Friday night which came with the normal disclaimer, “I don’t usually give stock tips to people.”
The source was a young man who I’ve known for about six months from that damn club I belong to. "Stu", I’ll call him,is about 27 years old and works as an investment advisor for a company which requires you to have $ 2 million in manageable assets before they will take you on as a client. Stu sits in the sauna at the club for about an hour a day wearing one of those wraparound belts that is supposed to keep you from developing a paunch.
Usually I greet Stu by calling him “Warren Buffett the third” which always gets the obligatory chuckle from him.
Last night I was bragging about how well my portfolio had done this past week..even on days when the market had gone downward. Stu told me some things I wasn’t aware of. One that SUNOCO my largest single holding is going to split 2 for 1 this coming week. I suggested that when it did I might sell some of mine (because as a rule you shouldn’t have more than 5 % of your assets in any one equity and because SUNOCO has done so well in the last 4 years it is 12 % of mine). Stu recommended I hold on to all of it for the time being because after the split it will be more “affordable” and the price will run up some more.
Then came the stock tip. According to Stu a nearby company headquartered in Indiana, Pa went public on Friday and is a great investment due to the passage of the Energy Bill. The company is called “Superior Well Services” and trades under the symbol SWSI.
I found out everything I could about it yesterday. According to Stu they have more business than they can handle at the moment. The company currently owns 68 portable drilling rigs which are used for drilling oil and gas wells. It has been a “family owned business” since the 1870s.I discovered that it went up Friday 5 ½ points after opening around $13 a share.
I’ve decided to see if I can grab 60 shares on Monday morning at 9:30 AM when the market opens for under $1200.
Wish me luck!..

Addendum...October 8, 2005 If I were to sell SWSI today for what it is worth I would have an after expense return of 23.6 % in the approximately 10 weeks I have owned it.