Tuesday, April 1, 2008

Bookkeeping: Continuing to Build Huron Consulting (HURN)

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Last Thursday, I took my stake up in Huron Consulting (HURN) from close to nil to a 1.7% stake, as the stock warned on earnings [Mar 27: Adding to Huron Consulting on Earnings Warning] At the time I wrote

Frankly the chart is so busted I have no support anywhere - these are lows not seen for 2 years. So I simply let the market do its thing the first 20-25 minutes and then began scaling in - certainly the stock can go lower and without any clear chart support I did not buy a larger stake.

Now a few days later we seem to have shown some support above $40, and the stock is up 6% today so I am going to continue to build this stake with expectation that $38-$40 should be decent protection to the downside. The stock is now $44, and I am going to target $50-$52 as a place to begin selling off part of my position. Since most of my position was bought in the $40-$41 range that would be a nice 25% gain if achieved, and even from here it's a 15-18% type of gain. As an additional bonus this is the type of stock that should not trade in sync with the majority of the type of holdings I have. With today's purchases, I am taking Huron Consulting up to 2.6% of the fund from 1.7%.

As I wrote in my earlier piece this is far from best of breed but this sell off of 30% was way overdone in my opinion. Even if if takes a few months to breach the $50 level it will be a nice return; of course I'd prefer if it happened sooner rather than later. I am encouraged by today's behavior, but in this tricky market today's gold is yesterday's trash... but downside should be relatively limited at this point to the upper $30s/low $40s. So I like the general risk/reward over the mid to longer term from these levels.

Long Huron Consulting in fund and personal account


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