Yesterday, I dropped Bell Microproducts (BELM) from the Special Situation Survey recommended list. I didn't drop it because I think it is overvalued. In fact, I think the stock should be selling for $8-10 per share. I dropped it because it had been on our list for 28 months. We typically keep stocks on our list for no more than two years.
Yet I'm shocked at the reaction. The stock fell as much as 12% soon after our close out. I'm sure much of this is coming from swing traders who buy or sell a large number of shares in reaction to any news that comes out. News of our close out even made it onto the Yahoo message boards.
A Special Situation Survey close out is not necessarily a sell recommendation. In fact, I still believe BELM is an undervalued stock. I've owned it myself for several years and haven't sold any shares. I suspect this stock will be bouncing back rather quickly.
