September 2, 2010

Covanta Red Flags: Dodgy Poolbeg Incinerator Contract Expires - Time to Short Covanta?

 Signal: Covanta Stock to Drop?

Covanta Red Flags

Dodgy Poolbeg Incinerator Contract Expires

The Motley Fool considers 
"short interest greater than 5% to be a warning sign. While plenty of great companies can carry high short interest, that red flag is your invitation to dig for troubling information that the [Covanta] company's buyers might be missing."

Here's one Covanta red flag.  After the allocated three years, Covanta's secret 2007 contract for the Poolbeg waste-to-toxins incinerator in Ireland terminates on Sunday, September 5, 2010.  

Canceling that contract could save Irish taxpayers and society about $1 Billion (€750 Million) over 25 years.  Whether the Drumcondra Mafia reignites that dodgy contract will say a lot about winnings on de horses, the Manchester business man, Engineers Ireland and Regurgitated Philistine Spin (RPS).

Covanta (CVA) is a stock with a high percentage of its publicly traded shares sold short.  CVA may be trading at too high a price.  So if you like a gamble ask in Fagins about betting on this horse: further falls in Covanta's share price.

Second Red Flag for Covanta: technical analysis of CVA's stock price.  Technical analysis possibly signals that big Covanta investors are legally getting out of CVA stock based on professional insights not in the public domain.  

Covanta stock crashed below the 200-day average, a key signal, around the time they halted construction in Poolbeg, and just after the destruction of the Dublin Bay fresh water habitat for Brent Geese.  The Geese are in Canada at Polar Bear Pass near the North Pole and will have a pleasant surprise on returning 4000 kms to Dublin: wrecked fresh water source.

See The Motley Fool for why wasters in the waste-to-toxins racket should be dumped or at least shorted.  Or go to Fagins and ask about the other bankruptcies in Poolbeg: IGB, DDDA, Anglo-Irish Bank, Zoe Developments/Caroll.


Time to Short Waste Management?

At, we believe in buying great companies for the long term. However, not every company commands a fair price, and many trade for far more than they're actually worth.

In these situations, investors actually have a chance to benefit from a stock's plunge. When shorting a stock, an investor bets that price of a stock will go down, and profits from any downward movement. The practice is risky, inviting unlimited losses while only providing limited upside. However, shorting wildly overvalued companies can also help balance your portfolio against the wild market swings we've seen in previous years.

To find shorting candidates, we screened for stocks with a high percentage of their publicly traded shares sold short. [Edit by this blog: One such stock is Covanta (NYSE: CVA), with a current short interest of 5%.]

1 comment:

Anonymous said...

Traders Hedging Bets in Covanta as Put Volume Surges (CVA)
Written on Wed, 09/01/2010 - 9:13am
By Chip Brian

Shares of Covanta (NYSE:CVA) traded relatively unchanged yesterday, closing at $14.39. The stock has been drifting lower over the past nine trading days and is currently trading in a technical downtrend.

The put volume yesterday was 502 contracts, which is 13x the average daily volume of 38. Usually high put volume is an indicator that many investors are looking for lower prices in the near future.

SmarTrend alerted subscribers to take profits in Covanta on July 08, 2010 at $15.74, since then the stock fell 8.6%. We are now watching for any positive developments that could result in a new uptrend signal.