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Outside The Box: AT&T, Verizon

In this new feature the traders present plays outside those pegged to the headlines. In today’s edition, Gary Kaminsky talks Verizon and AT&T.

Despite widespread sentiment that the smartphone market is about to explode, Gary Kaminksy thinks carriers Verizon and AT&T should be sold short.

You read that right. Carriers that stand to benefit from the surge of new smartphone sales should be shorted.

Here’s why:

"Almost every money manager I talk to says interest rates are not going up," says Kaminksy. "Immediately I think that's an overcrowded trade. And I want to participate on the other side of that bet."

“As soon as money mangers think rates are going up they sell their highest yielding names." (Stocks bought just for yield are sold when rates go up.)

"So what I did is determine which stocks are the highest yielding stocks in the S&P 500.”

And Kamiksy says two names that stand out right away are Verizon and AT&T. "These stocks are widely owned by growth and income funds," he explains. And when rates go up those funds will likely sell.

But if that sounds a little convaluted there's more to this trade.

Kaminksy says there are also fundamentals that lead him to a short position. "Verizon and AT&T are fighting each other as well as the cable companies. The cost of customer retention is climbing and margins are under pressure."

As a result of all those factors Kaminksy is betting VZ and T are going lower.

*Gary Kaminsky is also bearish on the 3rd stock. And you can find out all about it in the Web Extra.


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Trader disclosure: On January 13th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Is Short (IJR), (IWM), (MDY), (SPY), (TLT), (UNG), (USO); Finerman's Firm And Finerman Own (GOOG); Finerman Owns (JPM) Calls; Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spread; Finerman Owns (BAC) Preferred, (BAC); Finerman Owns (AAPL), (BDX), (BSX); Finerman's Firm Owns (WFC) Preferred; Seymour Owns (AAPL), (AA), (BAC), (FXI), (INTC), (MSFT); Terranova Is Short (AGU), (CMA), (JCI), (CAL), (ESS), (ICE); Terranova Owns (QCOM), (MSFT), (JPM), (FCX), (EMC), (FTO), (XOM), (BAC); Terranova Owns (XHB) March Puts; Terranova Is Long March British Pound Futures; Terranova Is Long Copper Backwardation: Long May 2010 Futures, Short July 2010 Futures

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