Monday, March 14, 2005

NASDAQ IPO Doubles In 3 Months, Then Tumbles

The title of this post may sound like it belongs in the tech era but it applies to today's home building sector. Comstock Homebuilding Companies Inc (CHCI) builds single family homes in North Carolina and Washington DC, and admittedly it is a small cap outfit. Still, it is indicative of market psychology that a small firm goes public and the price rapidly goes through the roof.

One would also expect these recent IPOs to collapse before the established home builders. So a check of Comstocks' brief trading history reveals that after doubling in about 100 days, the stock has dropped 28% from its high. That decline includes over 10% today, and there is no apparent news to drive the fall.


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