Arcam AB stock soars 82% this month so far.
Careful now.

Just two weeks ago we wrote about Arcam AB (AMAVF), the recent IPO of a Swedish manufacturer of high-end, specialty 3D printers that print in metal. It had been brought to the attention of investors the prior day when someone wrote up the company on the Seeking Alpha website. After that positive piece, the stock immediately rose about 35% on the next day, from an open of $12.47 to a close of $16.85. For the next seven trading days, it traded between $14.50 and $15.75. I had traded some shares within that range for a small profit. These were trading shares, not purchased for a long term investment; just a momentum play.

arcam amavf stock chart

I would have hung in there longer but the stock didn’t show the price action or volume I wanted to see during that 7-day stretch. As I mentioned in my December 4 article, you have to be very careful with microcap stocks that are so thinly traded. And when I say thinly traded, I mean that I don’t think I had ever seen one with this lack of volume — in all of November shares only traded on five days for a total of 3,000 shares. In fact, when I purchased my own shares, I remember accounting for nearly half of the day’s volume at the time. So, seven days was enough time to wait for an upward trend to develop.

Well, darn it. I should have stayed in for eight days! The day after I sold, the same author wrote another story on Arcam, published December 14, where he reported what he deemed a positive outlook for Arcam. The stock jumped to $16.90 that day, $20 the next and today closed at $22.75. Arghh. But I’ll tell you what, if I were still in it at the open today, I would have sold at my first opportunity. Not that there is anything wrong with Arcam — I’m sure it’s a fabulous company — it’s just too much of a rise for a stock with no fundamental news driving it.

You see this price action alot with very small microcap stocks, that have small floats, very low volume, a low stock price and hype in the press. Prices can shoot up quickly and fall just as fast. And more specific to this market, people are so excited about 3D printer stocks, and so many feel they missed the boat on 3D Systems (DDD) and Stratasys (SSYS), that they can’t help but jump on the hope of getting in on the ground floor of an undiscovered 3D printer company.

And what investment house produced the report on Arcam? Must have been Merrill Lynch or Morgan Stanley or another of the big boys in order to push the stock so high, right? No, it was just an author on Seeking Alpha, a site that let’s all comers submit an investing article, and I see that he has a total of three articles to his name on the site, two of which are the ones on Arcam. Not taking anything away from him; he sounds like a smart guy. All I’m saying is 1) of course, do your own due diligence after reading it, and 2) realize how volatile this stock is if an unfollowed author’s articles can nearly double the stock price.

I’m not writing to recommend that you buy, hold or sell the stock. I’m only writing this because many readers of 3Dprinter.net are probably not experienced investors, and these 3D printing investment opportunities are tempting, and I want to make sure readers understand the risks of thinly traded microcaps. That’s all. If you are an investor who knows what you are doing, have analyzed the stock, and feel it’s a great investment at this price, that’s great — buy and hold on.

But, hell, what do I know, I got out at $15-something and left a ton of money on the table. But no one can pick the bottoms or the tops, you just try and catch a good part of a run while controlling your risk. In retrospect, I should have held a couple more days; but then I think, what if that second article would have been a negative one rather than a positive one? It would have been difficult to get out of the stock before it dropped.

Arcam has risen 82% from the open on December 1. It will be interesting to see what Arcam does the second half of the month. We’ll check back in then.

Disclosure: I do not own any shares of Arcam at the time of this writing. I do own DDD SSYS (and ONVO).

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  • I fit the picture you painted feeling left out of the SSYS and DDD ride. I am looking for some newer companies but what you described about the volatility and fragility of these companies has taught me to proceed with caution. If just one article made ARCAM rise so quickly, one needs to super cautious before they are caught in the Avalanche when they fall. A delicate balance is needed in your timing to either HOLD or SELL. Why are stocks so susceptible to pumping. There should be a law against false advertising used to pump these stocks. Due diligence is so crucial.

    • Hi Gary,

      Well, there was nothing wrong with the articles on Arcam; the author did a good job on covering the company, and seemed to cover it honestly. My point is just that any news moves small companies’s stocks very easily. Right now it’s up, but next time it could be down.

      Remember you can’t catch every stock move, that’s just life. And it is frustrating, I know. But I’ve learned over a couple decades of investing that your best friend is patience. Wait for opportunities and don’t chase stocks. And if a stock never comes back down at a good buy point, well, you’ve just missed it — but there are always other opportunities.

      The safest way to get into a stock in an uncertain market (which I believe ours is now) is to average yourself in. Let’s say that you want to own 1,000 shares of a stock. Buy 100 shares a month for the next ten months (or some period). Then, you will average in at a lower price than now if the stock goes down, or a higher price (but still lower than the 10-month high) if the stock continues to rise. But you didn’t risk buying all the shares at what might be a bad price. Of course, if you see the stock plunge, really plunge, on a market correction, you would want to take advantage of a bargain price then.

      In my opinion, and it’s just my opinion, 2013 is going to see some severe whipsaws up and down. The U.S. is leaderless and decisions are politically motivated rather than economically — taxes will go up, spending won’t be cut and capitalism will not be revered. I recently sold a majority of my overall stock positions while I wait for the mini crashes — and perhaps a major crash — ahead. You want to really buy stocks when others are scared to death and selling their shares. I even sold half my 3D printer holdings a couple weeks ago — the Long Term capital gains holdings, since LT taxes are going up in 2013 — to take some money off the table. Next year, if they get hit by general market conditions, bad press, a poor earnings report, or whatever, I’ll buy back in. If they keep running straight up (which I doubt), then oh well, I’ll look for other opportunities.

      I sort of went off on a tangent, but for you, Gary, specifically, and anyone else who doesn’t already own any 3D printer stocks, go with the two market leaders DDD and SSYS, and either average in as I described, or be patient and wait for an opportunity.

  • Rebekkah

    I think there is a lot of potential to make a little money in this nascent era of 3D printing. I think it also depends on what type of investor one is more than on what companies he or she invests in right now. A long term investor like myself is going to hang on for the ride no matter what happens and be willing to risk that initial investment (which, for example, a bit over $100 for 5M shares of SGLB is a risk I am willing to take for long-term potential gain). I think there is a lot of money to be made either way – whether through active trading or building a stable, diversified portfolio. Feeling that one has jumped out a day too early – well, that is the way a gambler thinks. I say be happy with the profit you made at the time and hope in twenty years that you don’t regret the sell! (Long SSYS, DDD, ADSK, ONVO and SGLB)

    • Can you explain your rationale in buying Sigma Labs (SGLB), a 2 cent stock, $10 million dollar market cap, under one million revenue a year company? Stocks are usually two cents for a reason. I’d love to hear the bull case.

      The press releases they put out don’t inspire me. The last one talks of an unnamed company they are doing a deal with. The release before that says they are doing a deal with Allotrope Sciences — I looked them up and they have no website (at least easily discoverable in Google) and AllotropeSciences.com and AllotropeSciences.net are parked domains at a domain registrar. The release before that one said they are doing a deal with Interactive Machines, Inc — I went to their website, and it’s a pretty bare, uncustomized default WordPress theme with only one new item on it, the Sigma one.

      Not much to inspire confidence. Even if a stock is only two cents, you can still lose 100% of your money.

    • Also, I meant to tell you: we have a new discussion forum we just put up and have a 3D printing investment section. Please register and start some discussions there too, and we can get more visibility on the conversations and get others involved.

  • Barry Borella

    I wrote ARCAM in September of 2012 asking if their stock was traded in the US. I could have (and should have!) checked on my own. My fault for not following up! In December I received a letter from the CEO apologizing for the delay in responding, saying yes it was. Obviously i should have gotten in in Sept.
    OK on to the fear of pumping up the stock by the seeking alpha articles. I began to follow ARCAM on the Stockholm stock exchange daily, especially before the US markets open. I also converted teh price in Swedish Kroner to US $
    http://www.nasdaqomxnordic.com/shares/shareinformation?Instrument=SSE88584 as well as using Google translator where necessary. Due to the time difference, European markets open before ours. Far more shares trade over there than in the US (I don’t have the numbers). I find that the price in the US mirrors the Stockholm price (how could it be otherwise?). US trading continues after the Stockholm market closes due to the six hour time difference between the US Eastern time zone and Central European time (some variations due to seasonal changeover to DST, and, of course, if you live further west,Alaska or HI maybe) the time difference is even greater. http://www.worldtimezone.com/time-europe12.php So, maybe after the end of the trading day in Sweden we just tread water. I haven’t really studied that .
    What I am getting at is that it does not seem reasonable that the activities in the US, much less one US blogger’s opinion, would have any influence on the price of a Swedish stock. I am far from a sophisticated investor, but this is a disruptive technology and I believe it will play a strong role in the future. Yes, I share teh concerns about it being thinly traded, and the big spread between bid and asked.

  • bip t

    Its trading at $107 .To author,whats your thought on stock and the company right now?

    • You must be talking about SSYS. I’m holding. For a long time. It’s my favorite of all the 3D stocks and my largest holding.

  • bip t

    I am long SSYS too.I was asking about arcam AMAVF its trading at $107 whats your thought on that?

    • Sorry about that. The way I feel about AMAVF is $#@#$! I missed it. I had it for a bit and did not hold. It’s up nearly 1,000% so far (in what less than a year?) The market cap increase scares me, but hell, I was wrong before. But in this market, I’m just naturally afraid to buy a stock that has gone up so fast.

  • Barry

    Re some comments about AMAVF being thinly traded, and big spreads, I suggest looking at what Arcam is doing on its home turf:
    http://www.nasdaqomxnordic.com/shares/shareinformation?Instrument=SSE88584
    Arcam’s annual report indicates 60% of the stock is held by institutional investors, which I believe is a good sign (but I’m open to hearing contrarian views). There are over 4 million shares of Arcam out there. Very few are in the US. The spreads in Stockholm don’t seem to be as wild as in the US, where few shares are on the market and much of the trading is done after the home market has closed.

  • bip t

    continuing to make new highs,its up about 7% today but i guess its too late to join the party [email protected]$^