I think there is a lot of fuss over nothing in American Science & Engineering (ASEI) but let's protect ourselves a bit. The 50 day moving average is $75. After yesterday's hammering the stock bounces right back to that level; I had a limit buy to short placed at $73.50 for a 1.9% stake (so I'm quickly underwater but I'm good with that)
My long position is about 2.2% so this is almost fully hedged 1:1. Strategy here is if ASEI regains the 50 day moving average to get rid of the short and yesterday's Motley Fool flap was nothing but a short term blip. If ASEI continues downward my short exposure will offset just about all of my long exposure and I'll cover as we fall.
By last Tuesday the stock has regained its 50 day moving average so I thought "coast is clear"! and I closed out the hedge (went long only) - then at the very end of last week the stock fell back BELOW the 50 day moving average (I missed it at the time; only noticed this weekend) and today *BAM* down 10%. Wow is that frustrating....
The news driver today is a partial termination on an Army order [Jan 9, 2009: American Science & Engineering Awarded $67M Defense Contract] - instead of $67M the company will receive $39M. The market seems to be overreacting with the stock down quite severely but its a bear market and mother bear is here to rip dollars from your wallet.- American Science and Engineering, Inc. (AS&E®) (NASDAQ: ASEI - News), a leading worldwide supplier of innovative X-ray detection solutions, announced today that it has received a Partial Termination for Convenience from the U.S. government involving its procurement of ZBV Military Trailers™ (ZBV Mil Trailer™) from AS&E. On January 15, 2009, AS&E announced it had received a $67.1 million contract from the U.S. government for a significant quantity of ZBV Mil Trailers — a ruggedized trailer version of the Company’s patented, top-selling Z Backscatter Van™ (ZBV™). As a result of the Partial Termination for Convenience, AS&E will realize $39.3 million of the original value of the contract. The U.S. government is expected to solicit for the remaining requirements to fulfill its immediate counterterrorism field requirements.
- Termination for Convenience is a standard clause in government contracts which gives the government the right to terminate the contract in whole or part, when the government determines that it is in its best interest, and without fault of the contractor.
- "We are confident in our unique Z Backscatter™ product offering and look forward to participating and ultimately prevailing in the U.S. government’s expedited competition for the remaining requirements,” said Anthony Fabiano, AS&E’s President and CEO. “We believe the ruggedized ZBV Mil Trailer is the best solution to the U.S. government to fulfill its critical mission to secure checkpoints and borders from vehicle-borne explosives and other high-risk contraband.”
