Is Martha Stewart's Run-Up a Good Thing?

Updated from 7:19 a.m. EDT

So, just what is up with shares of Martha Stewart Living (MSO Quote)?

The company's namesake and founder is headed to prison for a five-month stay after being convicted of obstruction of justice; the company has posted a loss in five of its last seven quarters; advertisers have fled its flagship title, Martha Stewart Living, like rats from a ship; and the company's turnaround hopes rely on the strategy of launching magazines and television shows without what was the company's most valuable asset: Stewart's imprimatur.

Despite all this, the company's stock price has jumped by one-third since Stewart asked to serve her prison term as soon as possible. On Tuesday, shares rose $1.64, or 12.5%, to $14.81. The stock is now trading where it was immediately before Stewart was convicted, when optimism about the trial's outcome pushed shares upward. ...