The truth about stock analysis is that you'll almost always be guessing. Even the most elegantly constructed calculation of intrinsic value isn't absolute. It can't be, because there is no crystal ball available for perfectly divining growth rates.
Rewind to last week. On Friday, I wondered whether Thursday's 8% jump in shares of Akamai Technologies (Nasdaq: AKAM ) was due to a short squeeze -- effectively a buying frenzy ignited by short sellers looking to cover their positions. A call to the trading desk at my broker, Fidelity, didn't reveal much. But the rep thought a squeeze was the best answer.
Well, it turns out there is more to the story. Indeed, some very solid detective work by two regular contributors revealed that former Akamai CEO George Conrades took back more than 1 million shares from a trust he had established. No cash changed hands, only ownership rights. But some technical analysts may have seen the additional 1 million shares in volume and concluded that an institution was taking a sizeable position, leading to an all-too-familiar lemming effect.
Theories aside, what impresses me most is the detective work. Fool member Snowtown, or "Snow" as he's sometimes referred to on the boards, found the Form 4 filing that showed Conrades' apparent purchase at the freely available EDGAR (Electronic Data Gathering, Analysis, and Retrieval) electronic database, which the Securities and Exchange Commission hosts here. A follow-up by Akamai Community discussion board contributor 5574tjh showed that Conrades placed 2 million Akamai shares in the trust on May 4, 2004, confirming the ownership change.
Never have I felt so good about such an embarrassing oversight. Why? Because Snow's research, and 5574tjh's follow-up, so elegantly proves the strength of the community that we've built here at The Motley Fool. Two ordinary investors, with a little time and effort, helped add some clarity to an otherwise confounding scenario. We could all learn from their Foolish due diligence.
For other Foolish fun with the Feds:
- The feds gave Amazon (Nasdaq: AMZN ) a patent gift recently.
- They also threw the book at Bernie, but he rode away in a taxicab.
- Be a pumper. Send your CEO to jail.
- Au revoir, Hank Greenberg.
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Fool contributor Tim Beyers likes his position in Akamai now more than ever. You can find out what else is in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has a disclosure policy.