Market madness

I haven’t done much financial blogging lately, but today I have a good reason to. The stock market rallied a bit today, and everything in my portfolio was up… except for Valero (VLO) and Nighthawk Radiology (NHWK). Valero I can understand. Oil prices fell a bit, and so the oil refiners will follow. But Nighthawk is the real interesting story, because it gives a bit of insight into just how badly some people want to get out of this market.

Nighthawk Radiology is a global teleradiology company that IPO’d earlier this year. The company allows hospitals to not have to pay for a radiologist to be on call or available 24 hours a day. Someone in the local hospital sticks you in the appropriate machine (MRI, for example) and runs the sequence of tests. Then, they send the scan overseas where a Nighthawk radiologist reads it and sends back their diagnosis. The hospital only has to pay for each scan they actually need, and their on-staff radiologist gets some sleep in the middle of the night and isn’t so cranky the next day.

Now, the financials. Back up to July 26th. Nighthawk reported record revenue. Great quarter. Stock shoots up over $2, hitting $20. Then, on August 1st, NHWK announces that their Chief Accounting Officer is leaving to pursue other options. Shouldn’t be that big a deal, it’s not the biggest job in the company, but because people are so afraid of anything that looks like it might possibly be bad news, the stock drops to $17 within a few days. Ok, fine. Some investors have weak stomachs and run from any news. Fast forward to today. People are happy with the Producer Price Index news, the DOW end up over 100. Does Nighthawk revel in this? No. Why? Because their recently departed CAO announced that he got a new job as a CFO. Stock drops almost 10%, closing at $16.05. Say what? We already knew the guy left! The press release said he was leaving to pursue other career options! Why should the stock take another hit because he wasn’t lying and in fact actually did get another job – a promotion nonetheless?

Of course, this is a short term issue and I can tolerate the day-to-day risk of investing in some of these smaller cap stocks, but while many see the market as trying to move back into bull mode, events like today’s action on NHWK make me think that we’re not out of the woods just yet. The horses are still getting easily spooked.