From Worst Quarter Since 2008 to Best First Quarter Since 1998

Last Oct. 4 we filed a blog post based on the closing of the worst quarter since 2008. We were talking about the third quarter of 2011 that ended Sept. 30. The Dow Industrial Average dropping another 240 points on the final day to close out at 10,913.

The dismal quarter prompted  a predictable outpouring of dire predictions from bears bemoaning  the state of the economy, the lack of job growth and the unfortunate future that lay ahead. In our post, we tended to take a longer view more in line with veteran analyst Otis T. Bradley (then of ICM Capital Markets, now with Gilford Securities), a relentlessly optimistic bull who has insisted for some time that, while we may have been in the midst of a correction back then, we are in the middle of the “Greatest Bull Market of All Time.”

Things have certainly changed in six months time much as Bradley predicted. Granted, the fourth quarter is typically a good one for stocks, and particularly for the technology sector. But the Dow has now climbed over 13,000 and has been there for some time. Stocks have been buoyant almost since the day we filed that post. Is Wall Street now in the middle of a bull market, as Bradley has long suggested? Market watchers say the first quarter of 2012 is the best first quarter since 1998.

New York Times correspondent Paul J. Lim, who is also a senior editor at Money magazine, offered some evidence on March 24 that it is (http://www.nytimes.com/2012/03/25/your-money/bull-market-may-have-much-further-to-go.html?scp=1&sq=Paul%20lim&st=cse). Among his key points:

  • Small cap stocks typically lead a bull rally, with the larger caps following only after bull markets mature. That is certainly the case. The Russell 2000 index has gained 36 percent during the past six months.
  • Economically sensitive stocks like techs and consumer discretionary stocks have been outpacing the broad market, another sign of early bull markets.

Back when we filed our Oct. 4, 2011 post we highlighted four small cap stocks chosen from the Thomas Weisel Partners Asset Management LLC fund, which invests heavily in small caps in technology and healthcare and the consumer and service sectors. We promised we’d report back, so here they are and have a look at what has happened to them:

Atlanta-based Internap Network Services (Nasdaq: INAP, http://www.internap.com), a provider of Internet services to help with cloud-based applications, closed Oct. 3 at $4.48, down 16 cents on the day with a market cap of $240 million. At mid-day on March 29, INAP was trading at $7.37, down 6 cents so far on the day, with a market cap now at $377 million.

Mountain View, CA-based Map Pharmaceuticals (Nasdaq: MAPP, http://www.mappharma.com), which develops drugs for a variety of ailments including diabetes, asthma and migraines, was apparently a big part of the Weisel fund’s holdings (not sure if that is still true). Back on Oct. 3, MAPP closed at $13.76, down 86 cents on the day, but the stock had been on an upswing. Back in early August it was down as low as $11.17. At mid-day March 29, MAPP was trading at $15.35, down 85 cents so far for the day. It so happens that MAPP reported its fourth quarter, year-end results on March 29, showing a fourth quarter loss and a financial restatement.

Wilmington, NC-based TranS1 Inc. (Nasdaq: TSON, http://www.trans1.com) develops minimally invasive instruments and transplants for degenerative disc diseases and is another stock in which the Weisel fund had a large position. TSON closed Oct. 3 at $2.73, down 27 cents. At mid-day March 29, TSON was trading at $3.24, down 3 cents on the day.

Mountain View, CA-based Hansen Medical (Nasdaq: HNSN, http://www.hansenmedical.com) develops robotics for controlling catheters and medical devices and was yet another big part of the Weisel fund. HNSN, which was above $5 in late July, closed Oct. 3 at $3.05, down 25 cents that day. At mid-day March 29, HNSN was trading at $2.97, down 2 cents so far on the day.

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