4. Zagg Hits Snag
Zagg hit a snag Monday, tumbling 13% to $7.30, after the smartphone accessory maker's CEO and co-founder, Robert Pedersen, quit the company. Pedersen stepped down as a result of a massive margin call that forced him to unload 515,000 shares last week at an average price of $8.22.Amazing. The guy brilliantly creates an entire industry out of covering Apple (AAPL) gadgets, but he's still not smart enough to cover his own ass and diversify his holdings. Figure that one out. Perhaps Pedersen wasn't paying attention back in May when former Green Mountain Coffee founder and chairman Robert Stiller was forced out of the very company he founded for a similarly large margin call that sent his stock reeling. Hey, who knows, he could have been absent that day. Or perhaps Pedersen simply never imagined it could happen to him. Maybe he was blindsided by the market's violently negative reaction on Aug. 3 after Zagg missed Wall Street's second-quarter earnings estimates by a penny. Despite a 60% year-over-year pop in sales, Zagg still lost a quarter of its value that day and it was that downdraft that most probably triggered the call that undid Pedersen. Nevertheless, considering more than 27% of Zagg's shares are currently sold short, Wall Street clearly lacks confidence in Zagg's prospects. So if Pedersen did think Zagg could zig indefinitely higher, he might have been the only one.
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