What a Wells Letter Looks Like

Posted July 14th, 2010 by Andrew Giovinazzi in Industry

What a Wells Letter Looks Like

Some companies have the unfortunate problem of getting a Wells Letter from the SEC. Plaintiff lawyers circle and sue the company on behalf of shareholders. A Wells Letter is kind of like the SEC getting in your kitchen and turning over all the pots and pans. This is nasty business for the publicly traded company. Using AlphaVision, the Wells Letter impact looks like this.

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The stock flagged in the View above, Amedisys Corp, (AMED) received a Wells Letter a couple of weeks ago. In this landscape, taller buildings are down the most consecutive days in a row. AMED stands out among the top 3000 or so names I follow in AlphaVision, being down the most over 8 consecutive days. The green color indicates higher 5 day average of daily value traded (1.29x the 3 month average). Money is leaving AMED in buckets in a market with relatively light volume. Something to think about before you do some Bottom Fishing.
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About Andrew Giovinazzi

Andrew Giovinazzi was a member of both the Pacific Exchange and the Chicago Board Options Exchange where he made markets in both equity and index option classes. During that period he never had a down year. In 1991, Andrew started and ran the Designated Primary Market Maker post for Group One, ltd in Chicago. He was instrumental in creating and managing a training program that allowed Group One, ltd. to significantly grow the company. He left Group One, ltd. to co-found Henry Capital Management in 2001. He became Chief Options Strategist of Option Pit Mentoring in the Fall of 2011. Andrew has a Bachelor's degree from the University of California, Santa Cruz in Economics. To learn more about Option Pit and their mentoring services, please visit: http://www.optionpit.com/mentoring

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