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Red Hat, Inc. Message Board

  • johnny_bdog johnny_bdog Mar 24, 2011 11:29 AM Flag

    The Game / Shorting RedHat

    The beauty of shorting RedHat right now is that even if investors get stupid and exuberant there will be plenty of opportunity to cover or just short more at $50 - that would be 50 times forward earnings. For a somewhat mature company that's a risky multiple.

    I see it settling at 40 times as long as there are no misses this year, but with expectations where they are and with management dubiously claiming to be "reinvesting" in the company instead of driving cash flow, the risks are pretty huge.

    I think it's likely that last q wasn't as bad as it appeared and this q wasn't as good as it appeared...a good chunk of the earnings beat was one time tax stuff...and it looks like forward guidance has a lowered tax rate as well...

    RedHat's a great short against an otherwise long portfolio...too rich for a buyout and the quarterly numbers aren't that volatile...

    Short again at 46.75...will cover half at 44 and the other half at 41. And look to short more before next quarterly.

58.29+2.14(+3.81%)Jul 30 4:00 PMEDT

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