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Whats up with CRM - who are the crazy ones?
I know that "trend is your friend" but it seems that Salesforce.com (NYSE: CRM) is just going boinkers lately.
I have a feeling that it is the MUTUAL FUND money that is
a) trying to get it as high as possible for 2005
b) buy it so they can say that they owned it in 2005
c) trying to kill those December $35 puts or sell as many possible "worthless" December $35 calls
The stock has had 3 DOWNGRADES in the last week, and that has not stopped the runup. The shorts are all-over it, but there is plenty of float for them to continue the battle. MSFT has finally entered their segment of the business.
I know people here mostly trade on charts but here is a comment that I saw on Briefing.com (written on Friday, December 9) that pretty much sizes it all up:
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Salesforce.com -- getting increasingly uncomfortable w/ the valuation (CRM) 35.50 +2.04: CRM gapped higher on Fri. based partly on Jim Cramer becoming more bullish on the name. We know of no single analyst who is ready to downgrade CRM here, but at this price, we would not be surprised to see someone on the sell side express concern about valuation, w/ the stock now trading at more than 150x trailing cash flow, w/ GOOG at 50x, and nearly 160x trailing earnings. Based on a FY '07 cash flow multiple of $0.76, the stock is trading at 46.7x forward cash flow. We talked to one contact today who said he hasn't seen a tech stock at that cash flow multiple since the Bubble days. In talking to our contacts, we sense a growing level of uncomfort about the stock's price. The counter-argument to CRM, of course, is that we think it's the most legitimate and most predictable on-demand software business out there.
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Since that was published, it got two downgrades on Monday but today closed even higher! Also, this stock has runup well before Cramer mentioned it, and in this case, he doesn't have much to do with the continued uptred. Let's put it this way, CRM did not need his help.
One last thing: The CEO / Insiders have been selling it like hot-cakes. Check this out:
Would love to hear from EVERYONE and their opinions on what to do with CRM. I know it will break down and burnup one day (soon), and when it does, it will be very ugly for the longs. What do you guys think? a revisit to the $29-30 level, or might be see $26?
MY OPINION - I think that when 2006 comes around, CRM will be dumped by the same mutual funds that wanted to show that they owned it in 2005. I have started to short a few shares. My avg. price is above 35, so I am not too worried.
I have a feeling that it is the MUTUAL FUND money that is
a) trying to get it as high as possible for 2005
b) buy it so they can say that they owned it in 2005
c) trying to kill those December $35 puts or sell as many possible "worthless" December $35 calls
The stock has had 3 DOWNGRADES in the last week, and that has not stopped the runup. The shorts are all-over it, but there is plenty of float for them to continue the battle. MSFT has finally entered their segment of the business.
I know people here mostly trade on charts but here is a comment that I saw on Briefing.com (written on Friday, December 9) that pretty much sizes it all up:
**************
Salesforce.com -- getting increasingly uncomfortable w/ the valuation (CRM) 35.50 +2.04: CRM gapped higher on Fri. based partly on Jim Cramer becoming more bullish on the name. We know of no single analyst who is ready to downgrade CRM here, but at this price, we would not be surprised to see someone on the sell side express concern about valuation, w/ the stock now trading at more than 150x trailing cash flow, w/ GOOG at 50x, and nearly 160x trailing earnings. Based on a FY '07 cash flow multiple of $0.76, the stock is trading at 46.7x forward cash flow. We talked to one contact today who said he hasn't seen a tech stock at that cash flow multiple since the Bubble days. In talking to our contacts, we sense a growing level of uncomfort about the stock's price. The counter-argument to CRM, of course, is that we think it's the most legitimate and most predictable on-demand software business out there.
***************
Since that was published, it got two downgrades on Monday but today closed even higher! Also, this stock has runup well before Cramer mentioned it, and in this case, he doesn't have much to do with the continued uptred. Let's put it this way, CRM did not need his help.
One last thing: The CEO / Insiders have been selling it like hot-cakes. Check this out:
Would love to hear from EVERYONE and their opinions on what to do with CRM. I know it will break down and burnup one day (soon), and when it does, it will be very ugly for the longs. What do you guys think? a revisit to the $29-30 level, or might be see $26?
MY OPINION - I think that when 2006 comes around, CRM will be dumped by the same mutual funds that wanted to show that they owned it in 2005. I have started to short a few shares. My avg. price is above 35, so I am not too worried.