I normally ignore most analysts comments or at least take them with huge amounts of salt. However, when an analyst either upgrades or downgrades within a week of an earning reports (ahead of it) I take note. Analysts are very cautious beasts, and they almost never stick their neck out there. This makes today's initiation of
Blue Coat Systems (BCSI) by Brean Murray interesting. Blue Coat and
Riverbed Technology (RVBD) have just been beaten to a pulp but as I stated of late the valuations are getting interesting even for "value tech" investors. [
Riverbed Technology Continues to Execute and the Stock Continues to Fall] And they continue to pile up great results but constantly get slapped down due to "fears of the future". So no matter what they say or do, it is not good enough because the boogey man of the future always lays ahead of them. These 2 names have been among the most frustrating I have held in a long time, because all they do is execute, and all they do after each great earnings report is sell off further. So doing good homework and identifying a subsector of technology that is performing through thick and thin has proven useless in this case, because "perception is reality" and perception is there will be future pullbacks by companies in a slower growth economy. Yet financials, home builders, and retailers are booming of late because of a booming future economy? It makes no sense, but no one ever said it did.
Blue Coat Systems reports next week so I am curious to see how it plays out with an analyst starting coverage this soon ahead of earnings. I have taken down this former huge winner for the fund (gains I've completely given back in the past 3 months) to a 1% position and am going to cut it down to 0.5% for now by
selling 200 of my 400 shares as the stock approached resistance.
These stocks have been beaten so badly eventually we are going to see a huge upside move after one of these earnings report. Unfortunately the only people participating will be those people willing to risk capital because it will happen after hours. I don't know if it will be next week, but the chart is showing a very easy "game plan". Both the 50 day and 200 day moving average have now converged around $29.50. If the stock moves above that level post earnings - that "resistance" will turn into "support" (barring a market meltdown), and it probably is time to get back on this train. If not, it stays in purgatory and I'll probably just cut bait with both names until the market decides the world is not going to end in technology.
Long both names mentioned in fund; no personal position
