Monster Worldwide

Rolling the dice on Monster Worldwide…

Last night Jim Cramer looked at the worst performing stocks in the S&P and picked three he said were due for a turnaround. One of his three picks was Monster Worldwide (MWW). He talked about several points, including his belief that the worst is behind them because the job market weakness is likely priced in. He also cited high interest from short-sellers, noting that a movement up might squeeze them and cause a mass cover.

Another point he drove home was the possibility that Monster could be a takeover target at these prices. He pointed to the success of LinkedIn, and said Yahoo or eBay could be interested. That was purely speculation though.

I think Cramer has an interesting point here. Really nobody is expecting much from the job market, and that is not a good sign. That said, if the job market were to start recovering it would likely be considered a ‘surprise’ and thus could generate a move in Monster Worldwide. Additionally I noticed that options for 2 months out are carrying a 5% premium for a $15 strike. Given the stock is sitting at $13.93 today that seemed pretty healthy, as you would collect more than 7% on the stock itself.

I did not sell any calls on my purchase of MWW, mainly because I see the potential for a bigger movement than just the 7% between current price and the $15 strike I would sell. I don’t know that this movement would happen before September, so it could still make sense to sell those calls. I think any surprise in the job numbers could be the catalyst for a 10% pop on this stock.

I sold Citi (C) at a loss, because all it has done is tailed off and slowly gone down. I look forward to the prospect that MWW will do the opposite, and perhaps even make a reasonable move by the end of the year.