Friday, October 22, 2010

Bookkeeping: Taking a Speculative Stab at Atheros Communications (ATHR)

No stock has confused me as Atheros Communications (ATHR) the past half year.  Before cloud computing stocks were all the rage, networking stocks like ATHR were the apple of the market's eye - this was one of our big winners in 09 and early 10.  But since crossing below the 200 day moving average in mid July, it has been purgatory... this has been one of the weakest Russell 2000 stocks of them all.

The stock is getting "Riverbed fever" today and showing signs of life, as the halo effect takes over many stocks that are only somewhat related to that stock.   Normally I don't play earnings for earnings sake but with a stock beaten down for so many months in a row, trading at about 12x forward PE for what should still be 20%ish type of growth over the long run, I though it a decent risk/reward to make a smallish foray.  Earnings are Monday so I started a 1.25% exposure just for kicks.  If the stock can get a quarter of the valuation of a Riverbed or F5 Networks or Acme Packet it would be a double from here.  I'm not saying it will - just saying it's cheap.  We'll see if cheap matters soon.

If it bombs again, I'll probably be out Tuesday morning.  If it performs and jumps over that 200 day it can go a long way - the year high was $44.

Long Atheros Communications in fund; no personal position


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