Interesting Rd: Interesting Rd: Opsware Burns Short Sellers
Bloomberg reports: Opsware Inc., the data center software company formed by Internet pioneer Marc Andreessen, hammered short sellers who dismissed speculation the company would be acquired.
Wagers that shares of Sunnyvale, California-based Opsware were overvalued climbed each month this year and reached 25 percent of the company's stock in July. The short sellers, who sell borrowed shares and hope to replace them at a lower cost, got burned July 23 when Hewlett-Packard Co. agreed to buy Opsware for $1.6 billion in cash, spurring a 36 percent rally.
``It's almost the norm now that if you're a small software company with a good franchise, you'll get bought,'' said Kevin Landis, whose San Jose-based Firsthand Technology Value Fund beat 95 percent of its peers this year. ``It should have made people think twice about shorting it.''
Opsware's gain last month was the second-biggest among Nasdaq Stock Market companies whose short interest was above 10 percent, behind Emcore Corp., according to exchange data as of July 10. Short sellers dismissed recommendations by Deutsche Bank Securities analysts to buy the shares on expectation of a takeover. Andreessen, the co-founder of Netscape Communications Corp., sold his company to America Online Inc. for $4.2 billion in 1998.
Opsware stock traded at 63 times estimated 2007 earnings at the beginning of the year and climbed to 91 times profit before the acquisition was announced, according to Lamba.
The company founded in 1999 makes software that manages data centers for more than 350 clients, including JPMorgan Chase & Co. and Target Corp. Andreessen, Opsware's chairman, helped develop the first Internet browser and was technology chief at Netscape.
Acquisitions of technology companies weren't slowed as much by the climbing credit costs from subprime mortgage defaults, said Jim Oberweis, president of Oberweis Asset Management in Lisle, Illinois.
Starting in September, the NYSE and Nasdaq will report short interest data every two weeks, instead of once a month.
Full story: bloomberg.com |
