No Sense to the Selling in Yahoo!

Cramer recounts his partner's experience in trading Yahoo! after the company's conference call last night.
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Jeff Berkowitz

came out with guns blazing in the

Yahoo!

(YHOO)

badlands last night. It seems he had the opposite experience I had. This time, the bears pushed Yahoo! down almost from the moment the quarter was reported.

Jeff bought the stock all the way down to 168, as furious sellers pounded

Instinet

and some of those sellers clearly tried to make everybody panic out. They couldn't rattle "Quick Draw" Berkowitz's nerves, though.

It looks like, after the solid conference call, there was no sense to the selling. None at all. The quarter was strong, with only

Geocities

disappointing. Everything else was just smoking.

In the moments after the quarter, when the stock was sliding, you had to be nervous. I think, however, that Yahoo! was a victim of hedge fund group thinking. Let's go over this.

The pattern has been that Yahoo! peaks the day of the quarterly report and then leads the Net down. So hedgies want to get short the stock immediately.

Remember, hedgies love patterns, and this one has been a moneymaker. Jeff called an audible last night when he saw all of the hedgies lining up in one direction. He reasoned that this time would be different because Yahoo! did not have that super run to its high ahead of earnings. This time, Yahoo! was down. That made him think that the pattern could reverse.

Now the stock is trading up nicely. I think Jeff bought too much, and I want to sell some at 178 just to book a 10-point gain. But I am equally impressed with the quarter, and I am unwilling to blast this Geocities deal just yet. With the arbitrage pressure off the stock in two weeks when

broadcast.com

(BCST)

closes, I think new highs could beckon. But, as always, I am a trader. If it gets to new highs, I will have much less stock than I have now.

Darn, I wish I had been in the badlands last night. But my second looks like he shot the lights out. Good job.

Random musings:

Equal time for bears? The rap on Geocities is that Yahoo! paid $8 billion for a mere 40 million page views a day. Oh boy, what a disaster!

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Yahoo!. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.