F5 Networks (FFIV)

I have built a large position in F5 quickly. The company made a decent sized aquisition yesterday and was down severely on the news.

Last Friday the stock traded as high as $88.
Yesterday on news of the aquisition the stock traded in a range of $70 to $84, closing near the low of the day (never a good thing).

I started a position late in the day
250 sh @ $74.35 ($18.6K)

This morning the downtrend continued. A quick check of the 6 month chart, showed FFIV bottoming out in April 07 in the $65-$66 range, so a return to that level seemed logical, unless there was a quick reversal. Sure enough the stock has continued its downturn.

So I have added 2 more purchases to build on my initial position:
75 sh @ $68.04 ($5.1K)
100 sh @ $65.19 ($6.5K)

This gives me a position of approx $30K (3% of the fund) making it far and away the largest position for now. My strategy will to be trade part of this off and hold the rest. F5 is certainly not my favorite company in the space, but this large downturn created an opportunity and I like the resurgent networking space in aggregrate. I will wait to see if the stock stabilizes here in the mid $60s. A break of these levels would be worrisome as there is not a major support that I can see nearby, but the company has suffered a large loss due to a relatively small aquisition of a company that will open them up to some new customers in the storage space. And it's all cash, hence no dilution. Seems reasonable - and a typical market overreaction.

No position