OTC, Open Text

otc jan 26 2014

This one looked pretty ripe at the $70 level. Here we are $40 to $50 higher, all in just a year and a bit. This is now a sell in our opinion. Friday it traded in the opposite direction to the market, going up about 10%. A number of things contributed to the gain, most importantly the announcement after the close on Thursday of a 2 for 1 stock split. The extra share will be paid as a dividend which is tax efficient for a lot of investors. Feb 7 is the date of record for this event so you have another week or two to figure out if a dividend is preferable to capital gains in your individual case. The stock is trading at a 40x p/e multiple and the RSI is above 80%, but most importantly the stock is climbing vertically. We have no idea what enterprise information management systems are but we suspect that they behave much like that double-dekker plane that falls back into its own exhaust fumes once the momentum is lost. The logical target is about $50, after the split that is $25.