Some Key Points on Lockups

Cramer says that there are times when lockup expirations are all you need to know.
Publish date:

The most befuddling concern in this market is over lockup expiration. I can't deny the importance of these affairs when stocks have run up. Venture capitalists, by nature, need to take things off the table. You don't want to get caught in the onslaught of an insider dump.

Join the discussion on


Message Boards.

But sometimes, people are too blind to these things. As a frequent interloper into our

message boards, I was well aware of the worry about the pending

Ask Jeeves


lockup expiration on Dec. 28. Much of the chatter about this stock is about the expiration, as if, for some reason, the Jeeves backers really want out.

That creates opportunities. This morning, when


(MSFT) - Get Report

rolled out its

Ask Maxwell

help service, which utilizes Ask Jeeves technology, I was able to buy some stock at what I felt was an artificially low price because of lockup-expiration worries.

Certainly, there are times when these expirations are all you need to know. Take one look at the insider selling in



after a recent lockup ended, and you will see what I mean. It caused a break, a buyable break, but a break nonetheless.

But we can't be blind to opportunity simply because of supply worries. We don't know how much of Ask Jeeves is going to come off lockup. We do know that the stock has been hammered in anticipation of that lockup. Unlike "bad news," lockup expirations are sometimes already in the stock, because market-makers know to get short ahead of these events.

Remember, expirations are simply one piece of the puzzle, not the whole puzzle itself. When you see or hear talk of lockup expirations dominating chats, that may be the time to go long.

Random musings

: Nobody likes being scammed on boards, and I hope they throw the book at the scammers who got nabbed yesterday for manipulating some nonexistent company of a small cap. But let's get realistic -- much of these gains come from people who know that they are phony but figure the next guy doesn't know that. The real crime is in allowing moribund stocks, totally susceptible to manipulation like this, to continue to trade. They should be eliminated from every sheet, including the pink ones.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Ask Jeeves and Microsoft. 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