When the earth shakes and rattles, Taylor Devices' stock goes on a roll.
It happened again last week, when the North Tonawanda shock absorber manufacturer's shares nearly doubled in price within an hour Monday after another strong earthquake struck off the coast of Indonesia.
But unlike the prolonged price spike that followed the earthquake that spawned the devastating tsunamis in late December, this rally quickly lost its punch, leaving Taylor Devices shareholders to settle for a 12 percent gain for the week.
It sure was another wild ride for Taylor Devices' shareholders.
When the week started, Taylor Devices shares had settled back into their typical sleepy pattern after the December earthquake and tsunami had turned the stock into a magnet for day traders and Internet message board chatter.
The shares had closed the previous week at $3.31, which was less than half its price at the start of the year, when the stock still was in the midst of a tsunami-spawned trading frenzy that caused the shares to more than triple in the span of two days right after Christmas.
But when news of Monday's powerful earthquake hit Wall Street shortly after 11:30 a.m., Taylor Devices shares took off like a rocket. The day traders and short sellers who flocked to the stock after the first earthquake came racing back.
That's because the sophisticated shock absorbers Taylor Devices makes can be used to protect bridges, buildings and other structures from damage caused by earthquakes and high winds, so there's the hope that major quakes will lead to tougher building codes that mandate more seismic protection features.
"It's the only pure earthquake stock out there," says Christopher Carosa, who manages the Bullfinch Funds Western New York Series mutual fund.
The stock traders also like Taylor Devices stock because it doesn't trade much and has a relatively small number of shares in circulation, which makes the stock more prone to big price swings when trading heats up.
Taylor Devices stock has a history of spiking after major earthquakes and then quickly receding. A group of Taylor Devices executives and directors capitalized on that pattern by selling more than $400,000 of the company's shares during the December surge.
"It's just one of those things where you could buy it when it levels off and then sell it after there's an earthquake," Carosa says.
Last Monday, the Yahoo Internet message board devoted to Taylor Devices' stock, which had a total of 13 posts during the two weeks leading up to last week's earthquake, came alive again. "No stopping this one today," one breathless poster wrote a little more than an hour after the rally began.
In reality, the rally was already over, with the shares peaking at $6.44, a 95 percent gain, just after 12:30 p.m., less than an hour after the trading frenzy began.
Other posters, especially short sellers, were more skeptical. "It's all just a game of pump and dump," wrote another poster, who in previous postings indicated that he had shorted Taylor stock, betting that it would decline. "They received no orders from the last tsunami, they'll receive none from this tsunami."
Even so, Taylor Devices stock finished Monday as the second-biggest gainer on the Nasdaq, up 44.7 percent, even if its $4.79 closing price was well short of its lunch-hour peak. Nearly 6.2 million Taylor Devices shares had changed hands -- more than twice as many shares as were traded in all of February and to that point in March.
But the selling continued into Tuesday, when Taylor Devices was the third-biggest loser on the Nasdaq, with a 19.6 percent loss that put the shares back below the $4 mark at $3.85.