The Mystery of the Yahoo! Lock-Up - TheStreet

The Mystery of the Yahoo! Lock-Up

This kind of variable can't be gamed. We can know that a lock-up will expire, but we can't know who will pull the trigger and for how long.
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The mystery of the lock-up remains, well, a mystery. The key piece of information for holders of Yahoo! (YHOO) yesterday was how much stock was going to come in for sale now that insiders were allowed to sell.

Tell us what you think of Cramer's latest on


Message Boards. But despite best efforts by traders, salespeople, technicians and research analysts, this kind of information --

information that is material to the stock price but not the company

-- remains unknown.

Yet, it was all that mattered during yesterday's hideous session.

This kind of thing is new. Typically I care about what is happening at a company, not what is happening in its shareholder base. But the Net is still largely owned by venture capitalists who, in many cases, must sell as part of their businesses. So this piece of info becomes all that matters for a couple of days.

Many of you emailed me yesterday, trying to understand why I didn't come up with this lock-up stuff last week when it would have been more valuable. No kidding. I wish I had, too. But lock-ups come and go, and you just can't tell their effect.

How did I know that some shareholders would want out relentlessly at any price given their low cost basis? How did I know that the market makers hadn't prepped the market with ample shorts to take up the slack? You just don't know this stuff.

My hope is that this kind of input or insight is ephemeral, that what ultimately matters is how the company is doing. But I run the risk of being hypocritical about the long term if the lock-up selling drives the stock back to much lower levels. (Great

head's-up, by the way, on our TV show from

Adam Lashinsky

that this very move yesterday would occur.)

All I can say is that this kind of variable can't be gamed. We can know that a lock-up can expire, but we can't know who will pull the trigger and how long that trigger stays pulled. Those who tried to anticipate the lock-up expiration on the days leading up to it got their heads handed to them on the short side. So that's not much of a successful investment style, either.

If you are long like me, you just hope the selling runs its course. If it does, the forecast is sunny. If it doesn't, the forecast is pain.

Random musings:


Abercrombie & Fitch

(ANF) - Get Report

board lacked that parent-of-teenager angle that I think could have made me pull the trigger even bigger, but still a good discussion. If you still haven't signed up and haven't gone to our boards, you are missing some unbelievably good discussions. I find myself commenting with regularity, and I thank everyone so far for sticking to the facts. If you have that angst and want to bash me, don't share it on the boards; send it in directly to me! Spare our boards! ...

I went into that


that got all of the super publicity from

USA Today

and the

Washington Post

. I say give me a break -- you get much better insight on our boards for free than you get paying a buck to see someone rant about a stock. This could be one of those dumb ideas that gets so much publicity because of the powerful backers of it that it receives momentary traction, but I am dubious. Of course, they will now probably trick a

into investing in it, and we will have to hear that plugged all day. Mercy! ...

Rick Auletta

, my friend in charge of group deals for


, thanks those who weighed in

yesterday with the hope of getting some good rates for their law, accounting or investment firms to subscribe. He's at for those who missed him.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Yahoo! and Abercrombie & Fitch. 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