Blue Coat Systems (BCSI) is the case study in "don't catch a falling knife". Despite tremendous fundamentals, solid guidance and anything you could ask for [A Damn Shame - Blue Coat Systems] from the day Riverbed Technology (RVBD) warned and Cisco (CSCO) said financial enterprise spending was a bit weak, this stock has been pole axed [Networking peers keep hitting Blue Coat Systems]. The way these stocks are acting, corporate spending on WAN optimization is going to fall off the cliff in the next 2-3 quarters. Maybe they are correct, and I am wrong.
This is typically not the type of chart I buy because the stock is trending below major resistance (50 day moving average) and what looks like a "cheap" $31 can turn into "cheaper" $27 next week, but this company, based on growth rate, is now appearing quite cheap, so as we approach November 2007 lows I am going to stick my hand out again to get chopped and add another layer of Blue Coat Systems to the fund. The 200 day moving average is in the $29s and it appears this is going to be BCSI's near term fate, if this retest of November lows does not hold.
This takes my exposure up to 2.3% of the fund, and if you see some blood near your monitor - no worries, those are just my hands! Amazingly this was one of my biggest winners in fall 2007 :) luckily I took a lot off the table and locked in those gains but that doesn't mean this drop is not concerning in it's scope and persistance. This is now a 40% drop from its highs... breathtaking.
Long Blue Coat Systems in fund and in personal account
