Wall Street certainly does not like Level 3 (NASDAQ: LVLT) anymore. It not only had the largest short position of any stock traded on the Nasdaq as of November 30, it also had the largest increase in shares sold short compared to the number on November 15.
Short interest in Level 3 is now 165.4 million shares, a rise of 14.4 milion during the last two weeks in November.
Investors have soured on Level 3 for two reasons. The first is that the company has not been able to make money on a promising business. The company owns a huge IP backbone, used for moving everything from data to video to VoIP. With the big jump in broadband demand, stockholders think the company should be doing much better. Level 3, however, seems to make a new acquisition every month and that may well be taking precious time away from a management that should just be running what it already owns.
The other knock on Level 3 is its debt load. With the credit markets in trouble, companies with big debt, which probably cannot be refinanced, are really out of favor. The company has $6.8 billion in long-term debt.
Level 3 has dropped from a 52-week high of $6.80 to $3.45. Some investors believe it is heading lower.
Douglas A. McIntyre is an editors at 247wallst.com.
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Reader Comments (Page 1 of 1)
12-12-2007 @ 2:45PM
ALASTAIR said...
Note how embarrassed Jim Cramer appears anytime someone on "Mad Money" or another NBC news segment in which he appears so much as mentions LVLT? I've lost track of where he stands on this stock. Is he still pushing it? Cramer must have some faith in it because much of the long and short interest in the stock is due to his harping on LVLT in the past. Now, no more.
There is a price for being a national stock guru. After a period of time your followers will begin to dismiss you, and simply turn to another channel when "Mad Money" appears. It hasn't happened yet, but it will.
12-12-2007 @ 4:20PM
Al Kaesser said...
Why would anyone think Cramer would be embarrassed about one of his speculative picks. He has gave his audience so much more
12-12-2007 @ 8:18PM
DS said...
I work for this company.. To begin turning 'Cash Flow Positive’ – major restructuring at the higher (top-heavy) positions inside Level 3 must happen. To the Level 3 Communications leadership.. Do what is nessesary. If you do not, we will follow the same path as all the other communications companies - bankruptcy. Field Services is mean and lean. There is nobody left to cut at the technician level. Happy Holidays!
12-14-2007 @ 1:30AM
Nose said...
This article was created on December for short data from November 30? Why such a long wait before releasing it?
What also is not mentioned is that LVLT did not drop to $3.45 - it dropped to $2.66 on November 15th and has been going back up ever since up until the last couple of days.... mostly it appears as a result of this stupid article. The shorts had to be bailing out bigtime I suspect since it started recovering.