From CNetNews.com:
news.cnet.com
StorageNetworks soars on positive press
By Bloomberg News
December 11, 2000, 12:40 p.m. PT
WALTHAM, Mass.--StorageNetworks shares rose as much as 38 percent after a report that two Straus Asset Management
money managers like the prospects of the data-storage service provider.
The shares were up $11.56 to $51.50 in late trading, after reaching $55.25. The stock has gained about 80 percent since a June 30
initial public offering. Melville Straus and Robert Buettner told Barron's that StorageNetworks is the "winner in storage."
StorageNetworks sets up and runs storage centers for companies as they do more business on the
Internet. Before today, the shares had more than doubled since trading as low as $19 on Nov. 29, leading
some analysts to say that the jump was caused by so-called short sellers closing out their positions by
buying shares.
When investors short a stock, they borrow shares and then sell them, betting the stock will fall and they
can replace the borrowed shares at the lower price, keeping the difference as profit. If the shares rise, short
sellers must rush to buy them to limit their losses.
"The article in Barron's helped, but this is without a doubt a short squeeze," said Nitsan Hargil, a Kaufman
Bros. analyst, who cut his rating on StorageNetworks shares to "accumulate" from "buy." He left his
12-month share price target at $45.
The number of shares of Waltham, Mass.-based StorageNetworks that had been sold short rose to 1.6
million in November from 528,745 in September.
Mark Langner, an Epoch Partners analyst, agreed with Hargil.
"A lot of people shorted the stock after it had gained so much in so short a time," he said. "Now they are getting out." |
