Wednesday, February 13, 2008

Blue Nile (NASDAQ:NILE): Bounce @ $40?

I see nothing but cautious comments on Blue Nile (NASDAQ:NILE) this morning after extremely cautious guidance provided by management last night.

The stock is trading around $40 this morning after Citigroup and Lehman cut their ratings to Hold and several other firms are cutting their ests and tgt's.

Must say I'm a bit of a contrarian in NILE this AM as one could see this one coming a mile away. We have a close to 30% short interest in the name, which pretty much proves my point.

From Citi:

What keeps NILE as a Hold vs. a Sell are: 1. Clear market share gains, 2. Long-term international growth opportunity, 3. A 6% '08 FCF yield with buyback potential; 4. Unique supplier relationships; and 5. A strong execution track record.

So I'm buying small NILE here around $40 betting that:

- Management is being overly cautious

- Shorts will want to bag at least part of the huge gain they are sitting on

Let's see what happens.



danny said...

great call

FeirFactor said...

Nice call baby!