The Glass Is Half-Empty: Time to Short Acme Packet
Matt D'Alto submits:This is the second part of my "Glass is Half-Empty" series on stocks that could be ripe for some near-term profit-taking. Those of you who read my sell thesis article on NFLX understand some of my near-term concerns about recent trading activity by some 2010 high-flyers post their recent fourth quarter earnings and forward guidance. Another stock that hit my screen is Acme Packet (APKT) - one of the best performing SMID-cap names in 2010. 
I should begin by saying that for long-term fundamental investors, Acme Packet looks like an attractive, niche company in a rapidly growing market. They have a huge opportunity ahead of them, and on the fundamentals, there's actually a lot to like here. But the stock is currently priced accordingly by the market. In other words, it is a classic small-cap earnings momentum story -- one that could maintain a high multiple for a long time and ultimately result in a higher stock price than the one that we observe today. But likewise, near-term multiple compression is increasingly a risk due to something as simple as merely good rather than great quarterly results. As I will argue below, I believe the time has come for long-only holders to consider trimming their positions in APKT and/or buy some protection, and look for a better entry point on the stock.Complete Story »
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