Four Sigma Picks Lakes Entertainment, Inc.

The Four Sigma System picked Lakes Entertainment today at $8. The rise in the stock could have been sparked by the fact that the CEO just purchased 1 million shares through an option grant at a strike price of half of today's close, but isn't that really a no-brainer? The system performs well when the stock is less than $20, and has positive earnings. Unfortunately, Lakes Entertainment does not have positive earnings, so that makes this stock pretty risky according to the system. So far, there have been two stocks picked this year with these characteristics, and they have not fared well. I do like this business, however, especially with its large stake in the WPT. What is going to drive positive earnings? It looks like the next two quarters are expecting larger losses. We'll definately keep an eye on this one.