Craig -
I shorted it today at 14 5/8. Generally, I think it's a good short anwhere above 14. Below that, I think it's tough to justify the risk.
The reason I feel good about a short at 14 is this: I think it's fair value is around 8, and if you really believe that they can pull off this merger, grow the business, make money at hosting, and the economy is going to stay strong, then it might be worth 12. As you know, I think there is more hot air than business management talent at USWB and I haven't heard alot of good things about CKSG either (actually I've heard some negative comments from folks that have worked with them).
On top of shorting on valuation. I have been very successful with this stock going long ahead of PR blitzes and short into the blitz related rally. Over the past couple of days, USWB announced earnings, got lot's of positive press at CBS Market Watch (how they pull this off, I wonder), and the CEO Firmage was on CNBC (his 2nd appearance, again I wonder how this is arranged). I have got to go with my experience, here, that this rally is not sustainable, and more the result of the publicity than fundamentals.
Add to that the bushels of shares that will be printed to do the CKSG acquisition, and the potential bushels that might be printed to make international acquisitions, you have all of the ingredients for an excess supply of shares - and we all know what happens when supply dwarfs demand.
Further, on a business level, this idea about hosting sites for customers, while probably a smart long term bet, has little potential to generate immediate profits.
USWB - great trading vehicle. poor investment.
Rick. |
