Page 888 - How to Make Money in Stocks Trilogy

146 HOW TO MAKE MONEY IN STOCKS SUCCESS STORIES

IBD nationally. Preparing to teach each workshop was “like spring training,
where I had to go over the principles and basics for every event. Good habits
became deeply imbedded and second nature.” Kier taught over 30 work-
shops for IBD and really enjoyed helping other investors learn and profit
from the system.

Watch for Shoe Trends
Kier discovered a shoe company called Crocs in October 2006 that had an
impressive 13 quarters in a row of triple-digit sales. The last two quarters
had an EPS (earnings per share) growth of 330% and 120%. Sales had
vaulted 232% and 309% in the last two quarters. Stocks that exhibit extraor-
dinary earnings and sales numbers like that capture the attention of profes-
sional investors. Part of Kier’s research was to look for solid institutional
sponsorship in any new position he might take.
Jeff Vinik, a successful hedge fund manager, owned 1.8 million shares at
the time, which was up from 468 shares in the prior quarter. Kier knew that
a top performing hedge fund manager increasing the size of his position was
another strong indication that Crocs might make a major move. He bought
the stock out of its IPO base and added to his position as the stock ran up.
Kier was sitting on a gain of 378% when Crocs reported earnings on
October 31. The stock sold off hard in after-hours trading due to disap-
pointing guidance for the next quarter that was well below expectations.
Kier saw the stock crashing (trading down sharply), called his trader, and
sold his entire position immediately in after-hours trading, locking in a gain
of 362% from his original purchase.
Through his studies of past big market winners, as well as his experience
with Crocs, Kier has found that shoe fads can cause a stock to make an
explosive move based on a new trend or style. Some examples that Kier has
studied are Reebok, L.A. Gear, and Decker’s Outdoor, the maker of Uggs.

The Solar Craze
In March 2007, Kier bought First Solar, the maker of photovoltaic solar pan-
els. The group was extremely strong at that time, as demand for alternative
energy sources soared. Kier bought the stock as it bounced off the 10-week
moving average line but got shaken out shortly thereafter when First Solar
dropped below that line on heavy volume. He decided to sell the position at
that time because earnings were coming out later that week, and one of
Kier’s rules is to not hold positions going into earnings announcements if he