I have crunched the numbers every which way and I come out with a pretty good range. Using the market caps, shares out, and being added, using some estimates and assumptions, etc. etc. I come to a BEST case scenario of 51 dollars a worst case scenario of about 35- and the vast majority of the results ranged in the 42-44 range. This makes sense with the most recent upgrade and price target given.)
I believe we wait until earnings for ultimate clarification. I also think much of that short interest was probably covered after the 1st of the year-given the volume and spring up to our current levels. Dont know what the short interest is beyond Jan 1 so that is just a guess.
As for technicals- the 1st level to watch for me is 31.90ish- a break of that and we may see more selling. The bailout point for me is 28.40/28.60- that was my add point, and also where the trend would be seriously broken. A ton of support around there. 33.90/34+ is your top but could easily be broken as it is unchartered territory above that. I think we are at the low end of a new level- low 30s up to high 40s/low 50s- may take some time and earnings/conf. call will be key.
Simple math and valuation exercises show that CFX should settle in at $40+ after the Charter deal is totally done and the arbs clear out (they created the big short position and will close it out when they get their CFX shares).
The next earnings call will set the tone after for the next year as CFX's next 24 months will have more to do with execution than charting.
To understand CFX, go back to the late 90's and read up on DHR ($2.6B cap in 1996 and $20.1B cap in 2006). Same people (plus some of the world's smartest investors on board this time - Byron Trott and Tom Gaynor), same strategy helped by 25 years of experience and lessons learned under their belt.
Comments reported on the Charter deal and the investors who helped fund it:
* BDT Capital Partners, an investment vehicle founded by Byron Trott, a former Goldman Sachs banker, is providing $680m for the Colfax equity capital raising. During his time at Goldman Sachs, Mr Trott became Warren Buffett’s favourite banker. Mr Buffett is reported to have called him “the only banker he trusts.”
* “Nobody seems to be aware of the fact that they’ve (the Rales brothers) created more shareholder value than [Warren Buffett’s] Berkshire Hathaway over any time period you’d care to look at,” says Mark Wilson, analyst at Collins Stewart, describing Colfax as “the real deal.”
* Thomas Gayner. while not nearly as famous as Warren Buffett, invests with a similar value approach and has produced an enviable track record. At one time Gayner was mentioned as a possible successor to Warren Buffett at Berkshire Hathaway.