tv Fast Money CNBC January 21, 2014 5:00pm-6:01pm EST
park in new york. >> we'll see you in a couple of weeks. "fast money" is coming up in a few seconds. what's on the docket? >> cyber security is hot, hot. we've got the ceo of a company that was actually happened to be profiled in "usa today." shape security. they are revolutionizing industry. polly morphism and bot walls. this could be the next target. >> it's desperately needed. "fast money" starts right now. live from the nasdaq market site in a snowy times square. i'm melissa lee. our traders are tim seymour, steven p. grasso, karen finerman and guy adami. we'll talk to the executive editor of citron research. it is calling for an urgent trading warning. it's sending one stock down 10%. we'll have details coming up. our top story. old tech withers while new tech soars.
ibm falling after missing revenue expectations. this while apple, google, amazon, continue to outperform. amazon and google hitting a new high in the session. guy adami, what do you make of this disparity between the old and the new? >> ibm is ibm, specifically. steve has talked about them. the eps, a lot of it was a different tax. their tax bracket got ratcheted down. this is as lousy, i think, a quarter as the lost couple that we've seen, which have been equally lousy. it's a big revenue miss by them. yes, they're moving into the cloud. yes, i think they will be successful at a certain point. but this is a huge company. ibm doesn't turn on a dime. to think it was going to happen on this quarter, to me didn't make sense. >> people are becoming complacent about ibm's ability to post double-digit growth here. here it is slowing down.
>> one of the big problems is a secular issue. if you look at the growth markets for them, that's been 61% of their eps growth since 2010. and they're not getting it. now, i would defend ibm here and say, despite accounting hieroglyphics, et cetera, et cetera, this is a company that's grown earnings around 16% a year since 2010. so, maybe in 2009. that to me, is dwarfing the s&p. maybe this quarter, not so great. but i also don't think that the stock is going to move significantly on this news. i think the stock is range-bound. until the secular headwinds get out of the way, i don't think you do much with the stock. but i don't think you sell it down here. >> seven-straight sales decline. shifting to cloud takes flexibility and versatility. and i'm not sure they can rid themselves of their legacy businesses. it's almost as if you're talking about blackberry on a different scale, obviously. blackberry saying we're only worried about surprise and security. we're not worried about hardware. for me, ibm, it's a slow
decline. but technically sets up for further losses from here. >> and the conference call going on right now. we'll check in with josh lipton. and we have brian marshall. a key thing that analysts will be listening for, china. you mentioned it, emerging markets. hardware, down by 40% last kwoo quarter. on the back of the third-quarter earnings, seeing a decline tonight. >> at some level, it is ibm. the valuation is really getting cheap. there's a lot of cash flow there. it's worth looking at. i don't feel like you have to run out right now and buy it. at some point, i think it's worth looking at. >> where do you -- i don't trade this way. where do you look at ibm and look at it as a value trap versus saying it's cheap? >> sub 10. >> that's a good question. where do you come up with that number? sub 10 times p.e., that's way cheap. you're asking for these guys to be trading 20% cheap from where
they were a couple weeks ago. >> but that's kind of in the neighborhood of where it is. it's a madeup number. >> cheap enough to buy. at that point, it's absurdly cheap. >> let's check in with josh lipton, who has been on the ibm call, joining us with the latest. >> the ibm conference call going on right now. the company's cfo, the new cfo, martin schroeder, talking to analysts about that top line disappointment. $27.7 billion. and going through the different divisions. schroeder saying it was a good quarter for software, revenue up 4%. talked about increasing cloud capacity of ibm. revenue was up 1%. but the pain was really in hardware, not surprisingly. revenue down about 26%. we had reports saying lonovo, trying to die vest for some time. he did say ibm will deliver at least $20 in eps in 2015. so, sticking by that 2015 road
map. by geography, he called out china and the problems there. only saying it's going to, quote, take time for business in china to improve. melissa, back to you. >> thanks so much, josh lipton. seeing ibm right now. session lows down 4%. we'll keep you abreast on the developments of the conference call. let's talk about what was working in technology. google. high on the street. 14.50. >> credit suisse upgrades. they're looking at the fourth quarter and seeing checks. and seeing delivery on the ad business. the paid clicks are going through the roof. if you look across the tech sector, these guys are delivering mid to upper teens over the last five years. and i expect they will continue to do it. we get back to valuation. somewhere you start to say they really need to deliver at least on the current earnings. this stock is trading 34-times earnings. i was talking about it two months ago. i'm not patting myself on the back. my point is, it was 25-times earnings.
you say i'm getting 20% growth at 25-times earnings, that's pretty good risk/reward, in terms of your valuation base. >> is the red flag on valuation going up for you, karen? >> it is. the report next week. but i would look to sell some upside calls against position. or trade a little. it's had such a huge run. >> january 30th i think they report. and we've said that. so, it's not like we're making it up now. if it runs another $100 after that to the upside, we missed it. the hope is that it's done what it's done in the past, which is sell off somewhat significantly and give you an opportunity to buy it at a discount to where it is there. but to me, that's a trade. you own it in earnings. you get ahead of the release. >> i own this stock below 900. i sold it when it gapped higher. i sold it at 1,021-ish, basically. i've been waiting for a pullback in the name. to guy's point, hopefully i do get that pullback. but i'm not sure.
it seems like it's a valuation call and a growth call. i don't think guys are dumping this game anymore. i think they're piling on both sides of the fence. >> let's get a market flash on another name that's moving big-time in the after-hours session. dom chu, what's going on here? >> amd is plunging about 11% in the after-hours trades. the chipmakers beat earning estimates by a penny. the company seeing double-digit declines in the first quarter that will fall below estimates. the outlook for revenue, not so good. that's why the shares are taking a hit, melissa. back over to you. >> double-digit revenue decli declines. and the stock has been a monster over the past 12 months. up 70%. prior to today's decline in the after-hours. >> there's been a lot of hope for amd. a lot of love. a lot of things. moving intel i think helped amd. >> console business. >> but what it keeps coming down to, you can look and go back probably 12 years, every meaningful rally at amd has been
an opportunity to sell it. and it seems to be coming to fruition once again. i don't think you get shorted here. i don't think you buy here. you watch it go into continued oblivion. >> you're playing around with a $4 number on a shock that has a 20% short interest. all of the news can be negative. and you can get your face ripped off, literally, in a name like this. >> that hurts. >> yeah. >> face ripped off. ouch. >> they made a movie about it. >> let's look at several stocks that have broken out lately. we want to play one of our favorite games here. breakout buy or bye? buy like purchase or good-bye. entirely confusing. grasso, alcoa. you said friday, you're in the stock. today, new high. >> yes. and 1177 was the old resistance in the game. on friday, i said it could go higher. i was looking at that $14 number. i believe jpmorgan, just look through here, $15 price target. i got help from him.
-- from them. i want to see where the stock settles in. but i would still b-u-y. >> the move in the stocks, unbelievable. >> up 47% since october. 47%. >> totally. totally. came in 10% on earnings. it filled that gap extremely quickly. to me -- >> you don't want to trim here? >> i just bought it on friday. i'm buying it for a couple of dollars move at this point. if you're a shrewd home gamer, you should have trimmed today. i'm not telling you where you should sell. i'm not telling you where to take profits. on friday, i told you it was a buy. today, i would still be in the name. >> buy, b-u-y. next up, frontline, the shipping company is seeing gains of 8% today. karen, buy or good-bye? >> i would have to say good-bye. >> bye-bye. look at bye-bye.
b-y-e. >> bye-bye. >> this is the exact thing we talk about when you have operating leverage, financial reverend. you have a stock that turbo-charged to the upside. a stock that's turbocharged to the upside. >> you said this was a stock for 2014. is 2014, now -- >> is it over? >> is it bye-bye? >> i think for the short-term. yeah. i think you have to take money off the table here. >> all right. so, good-bye. >> bye-bye. >> bye, like that. >> good-bye. >> that's so confusing. next up, delta, ending the day higher by nearly 3%, after reporting a higher-than-expected fourth-quarter profit. >> that's not fun. buy or bye is much better. buy, b-u-y. i'm not the only one that said this. uniformly, across the desk, we said that airlines set up well.
there's half as many major airlines out there than a couple years ago. and they seem to be doing better than they historically ever have. the airlines, maybe for the first time ever make sense. do you buy it up? 3.25%? i think you do. people are going to continue to chase this name. and that was a pretty good earnings release. b-u-y. >> that was guy adami's momentum call of 2014. kudos to you, right out of the blocks. >> stop now, you know? >> next up, blackberry gains more than 9% today. the stock's biggest move in three years, after news broke that the u.s. department of defense may use 80,000 blackberry smartphones in one of its new secure networks. the stock gained in after-hour session after its real estate holdings in canada. buy or bye? >> this is a reluctant b-u-y buy. here's why. you have a case where this company has a balance sheet that i think is fine. it's a company where you look at
the sum of the parts and you break down the assets, if they had to sell it off, it's still somewhere around $11, $12. there's upside here. you have risk. but john chen, on the turnaround here, very sensible. get the hardware to where it's profitable and focus on the services. the pentagon is not willing to go to apple or samsung just yet. this is very good. they're only talking about a physical keyboard at blackberry. that's good news. b-u-y. but what a move. that's scary. >> you rip me on aa. this is up 88%, for the love of god, from december. >> if you need to go tit for tat, steve, that's fine. not just because i got you. okay? >> anyway -- going to take a break here. good time for a break. watch out hackers. cyber security project launching from stealth mode is looking to take cyber crime in storm. we'll introduce you to the ceo. that's next. plus, hot trades during cold
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as hackers evolve, so does cyber security. a company called shape security launching a new defense for the web today, the shape shifter. joining us from san jose is the ceo, of shape security, derek smith. derek, great to have you on the show. >> thanks. >> what exactly is shapeshifting? and what is a bot wall? these are things you need to understand in order to understand your company. >> the reality is, that most hacking today doesn't happen by an individual. it's a script that's automated and a hacker can rent a large number of previously-hacked machines. he can command and control them to go out and attack a website. so, we have invented a new category of solution that allows a website to completely deflect all of those kinds of attacks by
denying them any sort of static reference. >> how does this differ from what's already out on the market? it seems what's on the market focuses on detecting whether or not there's an attack. it sounds like you're putting up a firewall. >> we call the technology a bot wall. in the past, technology has relied on signatures. that is, looking at the process that malware uses to hack its way in. and being able to look for those signatures currently. we think that that is a dead paradigm, that it no longer works. new kinds of attacks evolve so quickly. our solution does not require any past knowledge or signatures of what's been effective before. and instead, it deflects the attack before it can get in. in a sense, we make it so the bot nets cannot understand your website to attack it. >> and who is using the
technology right now? when you take a look, there's been so many high-profile attacks. for one, the target security breach. when you look at attacks like that, do you think, we could have prevented that? that was preventable? >> there's not a lot of information out about that attack yet. but we do believe that if it came in through the website, that we would have deflected it. so, we work with major health insurers, major ecommerce companies, major banks, major financial institutions. anybody operating a website that has truly valuable information behind it. >> and are you working closely with google? one of your co-founders is a former google guy. >> we are working with a variety of companies here in silicon valley that want next generation defense for their websites. >> derek, we're going to leave it there. great to speak with you. great to understand this company that's emerging on the scene. derek smith of shape security.
let's trade some of the cyber security stocks. since palo alto network, this has been a group that's been on fire. >> pete has been talking about this, if you follow him. a number of stocks he's mentioned. symantec, it doesn't want to get out of its own way. it's trading 53. it's been sideways for a while. that's a stock if you believe the story, which i do, it's going to take time. but this is going to be, i believe, a big winner at some point. like intel bought mcafee a couple years ago. i'm not saying symantec is in play. >> the back by one of shape security co-founders is from google. it applies a close tie. you have to wonder who is next in being taken out. >> in this space, going back to an old name, is jamalto. they witch to emd. we heard about getting rid of the strips on credit cards. plays into their hands.
>> let's go to market flash. nuance communications in after-hours session. >> the shares of nuance are really not moving on an earnings announcement, per se. the maker of voice recognition and technology solutions gave preannounced numbers for the quarter that ended december 31st. it sees its first-quarter earnings of 23 cents to 24 cents a share, beating 20 cents. it sees quarterly sales between 487 to $491 million. also better than expectations. the company's full first-quarter results will announced on february 10th. that's why there's the optimism over the stock, melissa. >> thanks so much, dom chu. i wonder if there's a read-through to apple, which did see a pop today. tim? >> i'm not sure. back to nuance. if you look at the move in the after-hours where the stock is, this is exactly where this stock should go. and probably not a place for you to jump in. this takes you exactly back to where they were after they reported the november move, which was 20% down.
i look at apple and i think apple is making a move on what we talked about earlier in the show. you see new tech, if that's where we're putting apple, on valuation and their growth. >> ambassador is spot-on. it's back to where it got the end of november. we talked about it on the show. it's a complete overreaction. capitulation selling. this was an opportunity in the stock. go back and play the tape. play the tape. and now, we're right back to where it fell down from. >> not going to the videotape. >> you're not buying it now. >> warner wolf. >> nice call. >> nice stocks, too. >> a pioneer. >> let's look at the latest path for today's big winter storm about to bear down heavily on new york city. the worth of the storm is just arriving. also, take a look at the rest of the northeast here. we thought we would send our own guy adami outside in the midst of the oncoming storm to get his own read on what it feels like here in times square. he's making his way. raincoat, boots, yardstick. we'll check in with him after
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another batch of heavy snow hitting the northeast today. the winter storm is expected to bring ten inches of snow to new york and philadelphia, with windchills as low as ten degrees below zero later on tonight. let's head out to guy adami, who is fast-tracking the storm on the streets. b guy, how is it out there? >> it's a little chilly. no coat for me. a bunch of "fast money" fans. i brought my yardstick. and by the looks of things, we don't have much snow right now. it's cold. it's windy. back when i was a kid, this was
nothing. this is just snow. you have to suck it up, people. this is no big deal. >> do you always walk around with a yardstick or just when it snows? >> anyway, i can't hear a word you're saying. you can make fun of me at my expense. >> we already are. >> it's all good. i'm going to get back inside. >> while guy is making his way back into the warmth of the nasdaq markets, let's look at the big plays. grasso, you're looking at the wave playing cold, which is net gas. >> net gas. it had a move up. you play into the fall, winter months. it has not disappointed. you probably ride that trade. we seem to get a storm every other week. but the other way to play, is campus, cmp, with road deicing and salt and everything, as well. it's not a straightforward play. but cmp seems to be working. >> we had the ceo on.
most of the pricing is locked up. it depends on how cold, in terms of bearing on the price of next season. >> nat gas is called the wid widowmaker for a lot of reasons. nat gas has been a sell every time it's gone there over the last couple years. agree with the things that steve is saying. but if you're buying nat gas because of a storm, you're in a very difficult place in terms of resistance on the price. i wouldn't touch it. >> especially if you're playing ung, which may not correlate with nat gas. >> ung, i wouldn't own that. >> how old is guy right now? >> you send me out no coat. it's freaking cold out there. >> i offered you my paschmina. >> intrepid "fast money" fans out there. they're hanging out. >> you're intrepid, as well. you know what you needed? a pair of uggs? >> hopefully extended season for
cold-weather gear. also like a pdh, north face. and it's come off a lot recently. >> tim, travel name? >> the travel names. carnival, had a big value rally, a snapback trade is a sell. but i love starwood here. i love hot. they're getting growth because of the global business. go some place warm and do it for 25-times earnings, which is value within a sector that has rerated. >> you know what steve grasso asked you that you couldn't hear. >> what is that? >> he asked if you always carry around a yardstick. >> or just in snowy days? >> that's a loaded question. >> interesting that it's a yardstick and not just a ruler. i think that's impressive, guy. i'm not sure what it says about you, guy. i want to know, actually. >> totally. >> yeah. >> next time. as we head to break, look at
welcome back to "fast." you're looking at a live shot of the white house. what a beautiful shot, as the storm continues to bear down on the entire northeast. we were talking about winter trades. karen, we want to clarify your trade. >> i don't know what i was thinking. i meant bf corp, that's the owner of north face. >> let ooh check of ibm in the after-hours session, following the company's mixed fourth-quarter earnings report. joining us from the conference call, brian marshall, one of two analysts on the street with the sell rating on the stock. you saw the chart there. session lows. what stood out to you from the conference call? >> there's no change in our thesis, melissa. the revenue, being a top line.
down 5% year-to-year. they reported a beat on the bottom line. when you strip out the one-time benefits, especially on the tax line, they miss by a wide margin. 10%, basically, our calculation. at the end of the day, the company, you know, just continues to suffer from the large numbers. they're not focusing in the right areas. they have more research projects going on as opposed to development projects. they're going to have to back away from their long-term earnings target of $20 by 2015. >> international markets are about a quarter. ibm sales, china, a big market. they said on the conference call it will take time for this business to come back. is that baked-in? or is that more cautious than you expected? >> i think it's going to continue to be a problem. china pacific was down year-to-year for them. in the recent quarter. one g.o. grew over year-to-year, that was amia.
everything else is all down. they call these growth markets -- they've identified growth markets out there. the growth markets were down 9% year-to-year. the bricks countries were down 14% year-to-year for them. wherever you look, there's a lot of red numbers. >> that's the only place they got their growth. it's tim seymour. getting back to the accounting kind of, as i side, hieroglyp c hieroglyphics, this is a problem for me with ibm. and one reason why i think a lot of people are frustrated. they seem to have engineered earnings for many years. that's all i'm going to say. can you explain this? and when does it end? it seems as if they've managed to produce fantastic bottom lines, consistent bottom lines, that no one really believes in. >> sure. over the last ten years or so, they grew revenues. low, single digits. but grew revenues by 15%. earnings growth came from share buybacks. also, increasing the richness of the revenue mix.
basically, divested lower margin businesses. only 15% of sales comes from hardware. the model is overoptimized. if we continue to decline on the top line, i think they have to back away from the double-digit earnings growth targets. if you think about it, this is the seventh quarter in a row of year-to-year revenue declines. they continue down that path, double-digit earnings growth i think is going to be extinct in my view. >> great to speak to you. thank you for the time. brian marshall, of isi, with one of the two sell ratings on the street. we show that graphic. you saw the reaction in the after-hours. it flipped positive/negative, depending on the prior quarter. it did the opposite the next quarter. last quarter, it was down 6%. some thought this time it's going to be up. and here we are, down again.
>> this is called $189 or whatever it was trading today. that's a bounce from $172 and change. brian's point about them backing away from $20 in 2015 is interesting. they basically just said, $20 for 2015 in this release. it will be interesting to see if he's right. and if so, when they back away from that. >> pops and drops. big movers. a drop for starbucks. down 1%. grasso? >> people are so used to buying starbucks on any and all dips, this could be a mistake here. check the 200-day moving average. it's lower than that. i think this tells you about the consumer right now, that people are pulling back, even though starbucks has been a favorite. they've had wind at their back with coffee prices and everything else. i think those days are numbers. wait for it to come in a bit more. >> a drop for verizon. down 1%. >> verizon reported fourth-quarter eps. they evened on a penny. they are down at the wireless business, has improved. but one thing they said on the
call is these guys are looking at a much more competitive landscape. i think that has people worried. one of the reasons for the sell-off. about to get the approval on the vodafone deal. that's great for these guys. >> the pop 1%, guy? >> raytheon defense. they report on january 30th. they're going to surprise people to the upside. i like the rental space here. >> general motors, a drop of 1%, karen. >> not a big move. but it peaked on our show when they announced the dividend. it sort of had come in a little every day since then. sitting on it a little longer. i like it. i'm long. >> i have a pop for billion dollar brackets. berkshire hathaway is paying out big bucks for perfect brackets. partnering with dan gilbert of
quicken loans, he's giving 40 annual payment. chances of winning, 1 in 9 quintillion. >> feel like my odds are good then. >> you're saying there's a chance? >> good one, grasso. tradering seeing heavy activity in oil after halberten, baker hughes and schlumberger beat earnings. is it warm where you are? >> i am cozy. i saw guy hanging out in times square in the snow. on the oil service space, we saw unusual activity today. this is a little unusual for two reasons. one of them being, as you just mentioned, all of these reported. baker hughes, 1.5-times its average daily volume.
and schlumberger. halliburt halliburton, trading lower today. and rpc said people hasn't interpreted the earnings. and that the margins may have been better than they said. an institutional investor seems to be playing along with the bullish view. we saw a sale of 4,000 of the january 15 spreads. they collected $1.40. and they used the proceeds to buy a call spread of similar duration in january '15. they're risking about $1.2 million. they could potentially make as much as $4 million. but they're making a bullish bet that halliburton could be as high as $70 in about a year. >> thanks for the options action there, mike khouw. coming up next, one research form famous for its short bets is issuing a full-on red alert, on organovo. the man in large of citron
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shares of 3d printing company, organovo, after an urgent trading warning on the stock. andrew left joins us now. this is not the first time of a bearish note on organovo. but this centers around a boiler room issue. >> this is the first time i've issued a bearish note on organovo directly. although the bear case on organovo has been written about tirelessly online. that anyone can go read any of the many bloggers or columnists who have win the bear case on organovo. you obviously say to yourself, with 8% institutional ownership. and honestly, such a ridiculous story of a company that's going to bioprint limbs, kidneys. you look at their scanned r&d
and you say, who owns this? by doing some research and following up with some tips, we found a warning that came out of the swedish ministry of finance. pretty much like the s.e.c. the financial superadvisory authority. and they came out and just said, beware of people cold-calling from a cold-calling firm, in japan of all places, about organovo. and as we remember back in the states before the s.e.c. really cracked down on the otc stocks, there used to be widespread cold-calling on those. i guess it's transferring itself to europe and to asia. >> we did contact the company, organovo. and we got this response. i'd like to read this to you. i think it addresses what your problem is with the stock. the company's knowledge organovo, kanagawa never actually sold shares to any investors, but is alleged inted to have simply anded wired
funds. organovo is unaware of how any such activity taking place outside of the equity markets and not involving a broker/dealer, who could actually sell shares that can be hypothesized to impact the trading price of a market volume. so, to that point, i mean, is your only -- is the tenet of your bear case against organovo, the fact that the swedish financial authority and japanese regulators have issued warnings about this kanagawa boiler room in japan? >> exactly not. funny the response, used the word hypothesis a lot. what are they supposed to say? we're a terrible investment? they're not going to say that. it's ridiculous. just tell investors, just go read the filings. do a good amount of due diligence before you die a stock. and you'll come to the conclusion i did. i'm not going to spend anyone's
time restating a bear case, that's been stated so many times. instead, i was going to give an explanation for some of the trading dynamics we've seen in the stock. >> all right. i want to push back a little. you said organovo is a company that wants to print limbs and organs. they're printing liver issues used in testing. specifically for testing. >> they're not printing anything. they would like to go ahead and do this. they would like to make a business out of this. it's wonderful. i wish them luck. that's great. look at the stock price. look at the business. read everything online. and make an informed decision. i'm obviously not the swedish government. so, when that came out today, it was news to me. but it's newsworthy, to any investor, if that is something that is newsworthy. >> are you short organovo yourself? >> yes, i am. >> and 3d printing stocks in general? >> well, you say in general. am i short organovo? yes, i am. >> other 3d printing stocks? >> i'm involved in other 3d
printing stock, yes. >> just to be clear, some of the twitter response has been incredible, andrew. and a lot of the allegations on twitter say, why do you give this guy a platform to talk up his positions? are you getting paid from hedge funds prior to issuing a report to issue a report on a specific stock? >> that's ridiculous. i've been doing this 14 years. before twitter was a word, let alone a verb, i was going ahead and writing citron research. i find informed decisions. i've exposed more corporate fraud than any other blogger, journalist, columnist, that's ever existed. so, for anyone to say that, they're quite naive. go back and look at the history of citron and you'll see that. >> andrew, we're out of time. we want to get you on for your next big short ideas. andrew left, of citron research, pleasure to peek with you. >> likewise. >> interesting. with the invent of blogs, a lot of the research is disseminated more freely than in the past.
>> the first thing you look at is the short edge. you could have a huge short interest in this. only about 15%, that's less than 3d. if he's right. and he may be. he's done some really great work over the years. seems pretty binar to me. >> i talked to the ceo of organovo in the past. but the invitation remains open, if you want to come on "fast money," you're more than welcome. coming up next, why the uptrend in auto sales, dennis garmon placing big bets? the big unveil is next. just waiting to be found. tdd#: 1-888-648-6021 at schwab, we're here to help tdd#: 1-888-648-6021 bring what inspires you tdd#: 1-888-648-6021 out there... in here. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition tdd#: 1-888-648-6021 which shows you which ones are bullish or bearish. tdd#: 1-888-648-6021 now, earn 300 commission-free online trades. tdd#: 1-888-648-6021 call 1-888-648-6021
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an uptrend in auto sales, has some traders looking for alternative ways to play the seconder. dennis gartman has a trade on autos which has massive long-term bullish potential. joining us to explain is dennis gartman himself. in las vegas, nevada. away from the snow. away from the bluster. what's the trade, dennis? >> i took a look over the weekend. i've been watching it for a while. but the chart pattern just jumped out at me. liking at palladium. palladium and platinum are the
two semiprecious medal metals te involved in catalytic converters. the automobile sales numbers out of china really struck me. i look at the chart pattern and thought, this has gone sideways for 3 1/2 years. looks like it's breaking out on the upside. if gold doesn't give up the ghost, i think palladium has a chance to move several hundred points higher. you're going to buy palladium at $720 an ounce. you could be looking at $1,000 or more on palladium. i'd never say that about gold. but i can see that happening to the palladium market. you have to be careful. it's terribly, terribly illiquid. be careful when you trade it. it's not one of the things i would tell people to jump into. it can be extremely a liquid. but the chart pattern has my interest. and the manner of which
automobile sales are picking up, really has me interested. >> gold and platinum is a trade. i love being long platinum, short gold. for the industrial reasons in the auto sector. and unwinding a reason for the major gold rally in the last five years. if you look at the spread, this is an interesting trade. pre-2008 crisis. this is roughly two-times platinum to gold. now, somewhere around 0.87. you're short gold. you're long palladium. that spread's around 0.85 right now. could go back to 55. and that's very interesting. >> to me, agree with you completely. i think the way to play the trade is to be long on palladium, short of gold. you have to make sure you get equal dollar value. you have to work around a little bit with the size of the contracts involved. but i absolutely agree. i think the real way to trade this is to be long on the
palladium market, and short on the platinum market. it's a beat an increased economic activity. it's a bet on increased at the l catalytic converters. and it's dead-flat. there's no premium to be paid for the carry. it has my interest for the first time in a long while. >> dennis, great to see you. dennis gartman of the gartman letter in las vegas. so, if you want to play the global auto trade. we showed a chart of palladium and it went nowhere. and the stocks did fairly well. why would you trade palladium over the auto stocks? this is since december. if you look at a longer-term chart. why wouldn't you just play auto? >> i think i would rather play a spread relationship where i look back at historically where they should trade in relation to each other, on real demand. if you trade pplt, the platinum
etf, one way to get long exposure against the gld, you see how they should trade relative to each other historically. they're not. and there's more to go in this trade. >> did you find it interesting -- remember about a year ago, germany said they wanted their gold back? >> yes. and you thought there was a huge conspiracy. for the first time in a long time. wanted it back on their land. >> deutsche bank, they're pulling out of the gold -- a lot of interesting things going on. i'm getting, you know -- >> your spidey sense is tingling? >> it makes me believe that maybe that whole -- maybe there's some smoke -- maybe there's some fire to the smoke that we mentioned last year. >> i can't take you seriously without your yardstick. >> i wish i could find it. >> did you lose it? i have to return it. >> where? >> the owner of the yardstick. >> someone stole it from him. >> the cnbc graphics department. (vo) you are a business pro.
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sales were not as strong as expected. tim, you made a trade on friday. >> we sat around here at the desk on thursday. and to a man, people said it was an overreaction. and we had the analyst on who made the call, has it as his top buy. when i looked at the preannouncement, one, the holiday season, not the environment, you judge the ethicacy of what these guys are doing. their online sales up 24%, year after year. a place where the electronics industry was down. i bought calls because i don't want to make a big call on this. this is a trade. this is a company that was way oversold. it was a triple into these numbers. and holiday season that nobody did well in. you can play this one through february. >> oh, so, february expiratioex? >> i wasn't overpaying. that's where we were on thursday. went lower on friday. >> time for the final trade. around the horn. >> weakness on the departure at yahoo! >> alcoa, just to be safe.
>> karen? >> waiting to buy more cdf. now's the time. >> to tim's point, take profits in nuance. today's the day to get out on the long side. >> thank you for watching. long. >> if you're traveling home in the northeast, be careful. "mad money" with jim cramer starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it. "mad money" starts now. hey, i'm cramer! welcome to "mad money." welcome to cramerica. other people want to make friends, i'm just trying to make you a little money. my job is not just to entertain you, but to educate you, so call me. on a day where the dow sank and the nasdaq advanced 10.06%, it's worth noting we're only two full weeks into 2014 and people are already tracing