We would use weakness as a buying opportunity to buy high-quality names such as Cognizant Technology Solutions (ticker: CTSH), Accenture (ACN), Epam Systems (EPAM) and Fidelity National Information Services (FIS) as: 1) the punitive clauses of the immigration bill are likely to be watered down; 2) regulatory changes should lead to healthy demand from financial services and health care; and 3) a lower tax environment could boost tech spending.While it is premature to speculate on the specific clauses of the immigration bill, we would not be surprised to see the initial draft (when and if it is presented) to be punitive and expensive to Indian firms. However, as we have seen in the past, these bills are diluted (or dissolved), and we don’t expect the new administration to disrupt IT firms’ business models. With tech unemployment rates of about 3%, impairing companies that supply IT services is counterproductive as most U.S. companies use their services.

"Short Sellers Unfazed by Elliott Management's Letter to Cognizant" By Teresa RivasCognizant Technology Solutions (CTSH) rose nearly 7% in trading Monday, on news that activist investors Elliott Management published a letter they sent to the IT services firm, which Cognizant said it would review.However, while the stock is up today on the Elliot Management news, the bears aren’t backing down, according to S3 Partners’ Ihor Dusaniwsky.Dusaniwsky writes that the firm’s shows short interest at $1.3 billion, up a staggering $1 billion (314%) for the year, with much of that gain—232%—since the end of the third quarter.He dismisses today’s upward move, arguing that while the Elliott letter had the power to cause a short-term pop, short sellers still see the stock retesting its $50 floor, where it was stuck for much of last month.Details from his note:S3 Blacklight’s Crowding Indicator, a measure of the magnitude of real time shorting activity relative to market cap and float, spiked on November 16th and 22nd as shorts continued to build their positions with Cognizant’s short interest topping $1 billion for the first time in its history…In addition to its “macroeconomic headwind”, dubious Indian payments and board issues, short sellers may be feeling a tailwind from President-elect Trump’s immigration plans which would negatively affect H-1B visa statuses and therefore a significant portion of Cognizant’s 255,800 person workforce.With Cognizant short interest at record levels and climbing steadily since the end of the 3rdquarter despite the recent stock price rally, this looks to be more than a short term momentum play and more of a value or fundamental trade on the short side. The shorts’ $1.3 billion bet means that they’re not far behind Elliott Management, which has just over $1.4 billion invested in the firm."