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Technology Tune Up: Open Text, Symantec, Autodesk

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Software stocks outperforming broader market.

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I'm tired of talking about the financials, about oil and commodities. Let's talk tech for a moment instead: The Larry Ellison model of a consolidating software space is gaining acceptance as the destiny for a software market riddled with too many companies and solutions.

In an earnings season that had very little good news I was encouraged by the number of software stocks reporting positive surprises. Despite the weakness today, Symantec (SYMC), BMC Software (BMC), Autodesk (ADSK) and Sybase (SY), to name a few, have been out-performing the broad market. We crunched some numbers and found that Open Text (OTEX) looked good in my firm's models and I accumulated some shares coming off a great quarter, about 6% higher than yesterday's close. OTEX is a leader in the Enterprise Content Management space and there has been consistent M&A noise in this sector, especially on the heels of recent acquisitions at IBM (IBM), Hewlett-Packard (HPQ) and EMC (EMC).

The question I kept asking myself was "Why is the short position so large?"

Actually, "large" doesn't really cover it. According to NASDAQ, short interest is over 17 million shares, which is a staggering 34% of the float and over 25 days to cover.

In any event RBC Asset Management disclosed in a recent 13-G filing it had accumulated an 11% stake in OTEX.

Now clearly someone is wrong here and wrong in a big way. With the stakes so high on both sides of the table we have a very combustible mixture. The next few weeks should be very interesting.

I guess you know who I'm pulling for.

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Position in OTEX, SYMC, ADSK, IBM, HPQ and ORCL.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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