I added this to the managed portfolio at 14.35 based on chart / valuation.
I've read the blogosphere comments. I can understand the short interest. They're products suck or something. Revenue dropping rapidly... going obsolete. This is the world of technology. Innovate or die.
So I'm setting a stop around 13.50 -- about an .80 loss of it drops that low.
Furthermore, the CEO is happy to sell out at 15.50 (but they used company shares to do buyback at 20.00 plus). Yeah - that's a dickhead move.
There's a little news today and the play here, shorts may have possibly overstepped. SIGM is in talks to buy CopperGate -- I don't know anything about the deal. But if this increases revenues and they don't overpay (management has shown that they suck at this) -- then SIGM might be trying to reinvent itself and this would change the dynamics overnight.
In many ways, the 35% short interest is really the positive here. When there are 9 million share that have to be bought up at some point (out of 24 million) -- it might be wise for some of them to pay up now rather than wait for really good news.
Clicking in some really conservative numbers, the stock is worth $18 today so the margin of safety is not great. But tech stocks can change in a heartbeat and the shorts don't have much room to maneuver with the company only trading at $2/share -- the rest in book value. Up 3.4% on a down day is also positive. So big picture is kind of weak, valuation is good, technical signs are good/great.
Let's see if this works. I'm not really following anyone on this. Mostly trusting the charts, if you can trust a chart. (You can't.)
update: The Yahoo SIGM board is overrun with the shorties. I hate it when the board is like that. It's one thing if this were really a no revenue/no profit spec stock. But they have to bash it to buyers from coming in. Any positive news from anywhere is going to cause a squeeze I suspect. The idea of SIGM buying CopperGate sounds like a bad idea. They'll probably overpay. I suppose the stock might be rising on the possibility the buyout will be voted down. Management owns very few shares -- they probably can't control it for their benefit. I guess I stepped into quite a mess here but the stock is holding up very well today. When in doubt, I always listen to the chart.