SMSI’s Morning Dip Reveals a Lesson

Posted on November 20, 2020 by Brad Steveson

A new SEC Filing greeted SMSI investors this morning, disclosing that CFO Tim Huffmyer sold 20,000 shares at a price of $5.19 on November 19th (yesterday). The stock closed at $5.24 for the day. Not surprisingly, the stock opened lower this morning at $5.16 and quickly dipped to $4.93 in the first 5 minutes of trading. The price then recovered, trading back up to $5.34 by noon before reaching a high of $5.37 in today’s trading. I believe we witnessed an example of some retail novices giving up shares in a panic.

Early morning dip on the 5 minute candle

I would propose that a couple of lessons can be learned from today’s example:

  1. There are many reason an officer may sell and it is likely not because anything has changed with the company. An examination of the SEC filing reveals that CFO Huffmyer continues to own more than 260k shares of SMSI stock. It is far more likely that he sold this small percentage of his shares for a personal reason.
  2. Know what you own and what it’s worth. Then you will not allow yourself to be shaken out of your shares for the wrong reason at a cheap price. I suspect that whoever lost their shares for a greater than 40c discount today sold without considering why they bought the shares in the first place. This can often happen when you make a knee jerk reaction and push the sell button in a panic.

As a side note, SMSI has a lot of exciting opportunities in their pipeline. If you are not familiar with the story, I recommend you take a look.

Disclosure: I am long and I may buy or sell shares within the next 72 hours.

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Scott Shuda

Brad, I’m commenting to test out this feature. Reply back if/when you see this.

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