Friday, February 29, 2008

Bookkeeping: Adding to Huron Consulting (HURN) as Poor Man's FTI Consulting (FCN)


Off the back of yesterday's great report by FTI Consulting (FCN), I am going to add to my position in peer Huron Consulting (HURN) here in the $50s. I did review the numbers again yesterday from Huron's earnings report and they were not that bad at all; simply guidance was not as great as the market wanted and the stock has been punished tremendously.

The chart is an unmitigated disaster and I do not like buying stocks in such a position because they can continue to fall with no bottom in site, but we *might* have some sort of bottom here. Or it could simply be a weigh station before the next leg down. However, we've seen some strength here in the $48-$51 range for a few days at least and I'll add here, and see if we can show some resilience. If this level does not hold there is no support until $40 range, which would take the stock back to late 2006 levels.. a bit silly considering Huron Consulting is growing at a good clip (just not good enough for Wall Street) The stock is off 25% since earnings which is way overdone in my book; we are still talking a company that should be growing 25% a year for the next few years, and targeting over $3.00 in earnings in 2008. And as dislocations grow in the US economy their services "should" be needed more. However, the counter arguement will be as corporations feel squeezed they will cut back on consultants. So I can see both sides of the story, but I believe most of the fears are priced in at this point. Further, the valuation is much more attractive than it was just a few months ago in the $80s.

I've doubled my stake today by buying 150 more shares, and Huron Consulting is now a 1.3% position. If I see some signs of strength I'll add more, but we will have a lot of resistance up ahead in the $60s range.

Long Huron Consulting, FTI Consulting in fund; long Huron Consulting in personal account

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