Checking on tax loss stocks

Here are the tax loss sellers from the article:

—Accelrys ACCL up 1%

—AMN Healthcare Services AHS down 10%

—Antares Pharma AIS down 2.5%

—Bio-Reference Labs BRLI up 3%

—Connecticut Wtr Svc CTWS down 2.5%

—Corinthian Colleges COCO up 8%

—Digital Generation DGIT up 5%

—8X8 Inc EGHT down 1%

—Geoeye GEOY flat

—Superior Inds Int’l SUP up 4%

—Travelzoo TZOO up 10%

—Uranium Energy UEC down 1%

—Zhongpin HOGS up 25%

So on the whole you are looking at about 4% up on average. Meanwhile, the market was up 1.5%. So these stocks have beaten the market, assuming you have enough capital to book all of them with below 1% transaction costs on each end. Those trading fees will get you.

The stocks' Betas are important to look at, because if the market goes up, a high beta stock may track the market. So if you see a rise in high-beta stocks while the market is rising, maybe it was only their volatility and correlation with the market that caused them to rise. It's very difficult to measure.

The problem with just plugging a formula and chugging with the stocks you get is you could wind up with a bag of wind.  I believe one of the stocks on the list, Zhongpin, is in a basket of reverse merger ADRs that have been targeted by short selling firms such as Muddy Waters with questions of fraud. COCO has been the subject of criticism because of its reliance on student loans for income. Many of those are pharma companies which are dependent on FDA and testing results and have huge discount rates. But then HOGS was the biggest winner of the group, so what do I know? But I'm not going to buy that guy at any price. Just because you made money doesn't make it a good investment. Sort of.


Netflix has jumped tremendously, I believe in part because of the tax loss investment. It took such a huge hit in 2011, and I think you saw some tax loss selling at the end of the year. Now it is rising again. But I am not sure about the long-term prospects, to be discussed in the next post. It could be successful, but there is risk, especially when it has to compete on price as it is in the U.K. with Amazon.