Back in April, we mentioned a high-return, high-risk "flyer" named Rambus.
As we stated, we like having a few "flyers" in our portfolio that have the potential for huge gains.
Rambus is involved in patent and anti-trust litigation (with Memory Manufacturers [MM]) that could bring in billions of dollars in damages and ongoing royalties -- or could wring the company dry. Since we mentioned the stock in April, the stock has moved up steadily from around 10 (after bottoming at around 5 and 7 in Nov 08 and Feb 09 respectively) to the high teens.
The stock hit recent highs of around 19.5 as the anti-trust suit scheduled for the end of Sept 2009 neared. This date has now been postponed to Jan 2010 due to the illness of a MM attorney. The delay caused the stock to move from the 19 range down to the 15's. However, due to the strange circumstances surrounding the delay, there is chatter that other things are going on "behind the scenes." While this remains to be seen, the drop to the 15's indicates increased uncertainty, but not "horrible" news.
We continue to see RMBS as a high potential flyer -- with associated risk. As litigation moves forward, and with the stock recently penetrating upside resistance at 19.1, we see the stock moving back to the high teens --- and into the 20's barring other unforeseen obstacles. Next upside resistance levels include 26 and mid-40's (!!) -- nice gains from the current 15 price range.
Traders may want to see a base form before buying RMBS.