NEW YORK (Real Money) -- When will newer investors realize the concept that supply can wreck demand? I have been saying for ages that you shouldn't be in 3D Systems (DDD), in part because it has become too popular a spec. When I was on my endless book tour for Get Rich Carefully, I was awestruck at how many people liked three-dimensional printing stocks, with 3D Systems being the preferred way to speculate.
I turned negative on it much higher but felt that when it dropped to the $50s, lots of people must have believed the risk was out of it. The rap that I have against it is threefold: One, it failed to hit the estimates for a couple of quarters, two, it's all about endless acquisitions to boost growth, and three, the moves have been built on the backs of hapless short-sellers who thought it was all hype. Their shorting and covering, an endless process, helped bring this stock up and supported it the whole way. It is one of the reasons it is still valued at north of $5 billion, even as it is down 48% for the year.
Tuesday night, 3D Systems filed to sell 5.95 million shares, and Wednesday this surprise secondary priced at $53.25. Now, remember that 34% of the float of this stock is short, and many of the moves up of late are simply shorts who were covering, because the stock was getting some momentum. Their lack of ability to find stock to cover led to the rally.