Thursday, December 17, 2009

Bookkeeping: Beginning Positions in Sourcefire (FIRE) and Rackspace Hosting (RAx)

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A couple of breakouts caught my eye yesterday - Sourcefire (FIRE) and Rackspace Hosting (RAX).  Both are very expensive stocks but valuation seems to mean little nowadays; so I am going more on technicals rather than anything.   I do like the core businesses of both (IT security & hosting / cloud computing respectively).

Both are breaking out of multi month consolidation periods and as we have been saying for the S&P 500, the larger the base the bigger the ensuing move.  Of course for these moves to continue we will need the overall market to be benign.... no sure thing.

Sourcefire is a $700M market cap, with volume bursting nicely the past 2 sessions after trading between $19 and $24 for the better part of 3 months.



Sourcefire, Inc. provides enterprise threat management and intelligent security infrastructure solutions in the United States and internationally.

Rackspace is a $2.7B market cap, same volume increase of late after trading from $17 to $20 from late September to late November.



Rackspace Hosting, Inc. provides information technology (IT) as a service, manages Web-based IT systems for small and medium-sized businesses, as well as large enterprises worldwide. The company offers a suite of hosting and cloud computing services.

I am beginning starting stakes of 1-1.2%% into both stocks, and see if these budding moves can hold.  I am buying Rackspace in the $21.80s and Sourcefire around $25.50.  I will do more comprehensive write ups on these names when I have some more time, but we touched on Rackspace Hosting in this post [Jul 29, 2009: Colocation Stocks and Industry Overview]

Long both names in fund; no personal position

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