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Tuesday, November 2, 2010

Why $TORM was different and shorts should've listened

I was in and called $TORM on October 26th at $6.50, it hit $11.40 that same day. (I took some off and kept some because I believed in the story) Read Blog Post Then it took a few days where it languished near and just below $10. Of course the small cap shorters network (SCSN - I made up this acronym - group of Twitter shorters) was ready to call it dead. They said it was a POS, that the chart was breaking and it was just a pump. In this blog post I warned them that TORM was different Read Blog Post Well today shorts were crushed as TORM exploded to new highs.

As I stated, the Company reports earnings Nov 11th, already has $0.43 EPS for the first 6 months of 2010, and titanium dioxide shortages are in the news. I said this is a small cap with a real story and EPS that could catch fire as it had both EPS, growth, and a strong theme. $KRO has almost a 20 P/E in the same industry so if $TORM can get near a $1 EPS run rate this could be an interesting story. However, that is contingent on the next EPS report.

However, I said TORM in sweet article today shows DOW looking for ways to reduce dependence on white titanium dioxide.......TORM has a unique solution:

DOW article Read Article

TORM info:

Read Article

Read Article

Management said growth the rest of the year to show improvement over prior year (Possible $1 EPS run rate - my estimate). Easy comps this quarter. Also, showing Asia demand from the 10-Q:

2010 Outlook

In 2010, we anticipate market conditions for our products in certain end markets to improve. Based on our conversations with customers, economic data and information from other market participants, it appears that the worldwide demand in the paint and plastics markets has started to stabilize. We saw significant improvement in our more mature HITOX sales during the last quarter of 2009, which has continued during the first six months of 2010. In Asia, HITOX sales for in-country use have increased and we are now starting to see production rates for HITOX used in export products increase. In addition to improving market conditions in the US and Asia, HITOX sales are beginning to benefit from new niche markets, which we are hopeful will generate additional incremental revenue for HITOX this year.

That is why I said do not short TORM and that is why shorts were squeezed and probably will have more pain to endure.

Again, low floats not for big positions or chasing. If you are like me in on the original call you can enjoy some stress free profits.

No comments:

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