For those who checked in on my FIRST EVER trading report, I hope you enjoyed the wild ride and the 34% profit. Not bad for a weeks “work”.

I must say I was cautious of making the short call on Intuitive Surgical Devices, one of Wall Street's Darlings from 2007, so allow me a few minutes to revel in my brilliance while the other analysts brood in their respective corners.  Every dog has his day so they say. 

The results are included in Table 1, but to make something perfectly clear that I might have overlooked from the initial article, I do not suggest you make trades on “The Wildcards” section because they are essentially a mystery to me. I include these companies for those individuals who might know something that I don't, or who might have an idea that can help me make a better judgment call.  In fact, these wildcard stocks are often the ones that pay off the most because no one really has an idea of how well they performed during the quarter. 

Table 1:  Performance of Buys and Shorts for the 4/14/08 earnings season trades. 

<u>HINDSIGHT VIEWS:  NEWS AND REASONING BEHIND THE BIG MOVERS</u>

Badger Meter, Inc. (AMEX: BMI)

Blew away earnings as I anticipated!  However, the majority of their earnings did not come from overseas as I previously thought.  I was surprised to hear that they come from right here within the US, which can be seen as a positive, because the US has an aging water infrastructure, so BMI could stand to benefit.  Furthermore, I've added it to my watch list for a potential long term buy.  

Reported $0.41 actual vs. $0.33 estimate.   BMI credits the growing demand for radio enabled water meters for the aging US  fresh water infrastructure  as key factor in company beating earnings. 

BMI popped 15% after hours, and tacked on another 3% during the next following trading day.  CNBC even had the CEO and Chairman, Richard Meeusen, the next day to discuss how the company surpassed analysts expectations.  

 

High Flying Stock

Intuitive Surgical Devices, Inc (NASDAQ: ISRG)

If I had to do it all over again, I wouldn’t have posted this one because everyone will now expect results like this in the future. 

Shorting ISRG was a pure gamble on my part, albeit, I was playing the 5 to 1 odds that they would lower guidance based on the GE Healthcare earnings shortfall from earlier in the month.  GE had warned that hospitals were tightening budgets because the cost of borrowing money has risen so sharply that capital equipment purchases were cost prohibitive. 

That foreboding alert set off my radar for a sales slowdown, and that is exactly what happened when ISRG raised earnings forecasts, but less than Wall Street was expecting – which resulted in an immediate drop after hours and again the following trading day. 

Nothing is wrong with ISRG’s business model; it’s just that doing business with their primary customer (i.e. hospitals) will be more difficult in the current economy.  The Da Vinci surgical system they manufacture is supposedly quite remarkable, so this $60 drop in price could have the bargain hunters (like me) looking very closely at making a quick buck on Monday morning.