*Extra* Zapata Is In -- Should You Get Out?

The world's best Internet-stock indicator flashes 'sell.'
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Zapata

(ZAP)

, the once obscure company that morphed from petroleum seller to fish-meal flogger then to Web-stock superstar and back, today announced the revival of its "Internet initiative," abandoned just two months ago. In stunning confirmation that greed has no memory, the stock nearly doubled on the news, closing at 14 1/4.

But consider the past: Zapata's moves have been uncanny contrary indicators of both the stock market in general and Internet stocks in particular. Here's a rundown of the most recent signals:

  • July 6: SellJust 10 trading days before the Dow closing peak of 9295, and right about when Internet stocks began to roll over, Zapata announced plans to acquire or invest in 31 Web sites and split into two companies -- one focusing on the Internet, the other on the company's fish-meal business. The stock doubled on the day. Volume was an astonishing 10 million shares.
  • Oct. 15: BuyJust seven trading days after the Dow closing low of 7732, Zapata announces that "after giving full consideration to the volatile state of the global financial markets and the disproportionately negative impact on the Internet sector, it will not be proceeding with its previously announced Internet acquisitions and other related transactions." And on Nov. 3, ZAP discontinued its dividend.
  • Dec. 23: SellToday's announcement likely has much to do with the company's defending itself against the nearly two dozen securities fraud class-action suits launched in the wake of the abandonment of its original plans. Nonetheless, Zapata's record of exquisite timing makes you stop and think...

David Simons is managing director of Digital Video Investments, an institutional research firm. He has been involved in computer and online services for 25 years as entrepreneur, adviser and investor. At the time of publication, neither Simons nor his firm had any position in stocks mentioned in this column, though positions can change at any time. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to

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