Surge back in townCGI Kid et al,
I'm back... but to set the record straight I never claimed to be an "expert" in CGI, just someone who has followed this company very closely through the ups and downs over many years. I know the IT Services industry very well, and am well acquainted with their customers and many of their contracts... but I have no inside information (unfortunately for me perhaps).
Firstly... THE SHORTS.
A large short position doesn't necessarily mean anything. Shorts in CGI are mainly traded by institutional investors who, for the most part, seem to use them to cover long positions.
We saw very large short positions leading up to the magnificent run we had from $6.50 to $12.24 which started around this time last year.
While the shorts are interesting to note, it's not a factor I would use at all in determining the future direction of this stock price. In fact historically you would have been a very happy investor if you'd gone long every time the shorts went up.
Secondly... the BUYOUT.
No, it won't happen. Serge (not me, the other guy) holds all the voting rights with his nifty little B class shares. He's got enough money and (I believe) has no interest in selling out to a US company. In fact, I think he's out to prove to that a tiny little Quebec startup can take on the world in IT services. Thirty years later, he's done okay, but still a long way to go to become a major player in the US and the rest of the world.
Having COGNOS being bought by IBM was a great thing for CGI (but a little sad for us Canadians). Mutual funds and institutional investors have quotas to fill in the Tech index. There are now less companies competing for those dollars. Nortel, RIM and CGI share the same pool of investment funds. Taking Cognos out of the picture will mean more investment in the lonely remaining few.
Thirdly... THE CHARTS.
I'm not a chart person myself, but if you believe in charts you would love investing in CGI. Given the nature of the business (i.e. long term contracts and sustainable recurring revenue) very little unpredictable ever happens in CGI's world. Meaning that fluctuations and trends are the making of the market, and rarely anything else.
With the exception of the BCE fiasco almost two years ago (was it really that long ago?) we've had nothing that has torpedoed us, and a string of successful quarters that seemed to receive a fairly indifferent reception from the market.
I hate to make predictions based on charts, but I make the same premonition every year (Ferrari and that who read my stuff will recognize this).....
CGI tends to be a cyclical stock with strong appreciation starting around the end of the fourth quarter each year, lasting generally through to Q2. I have no theory as to why, just that it happens consistently. Based purely on the trend from the last few years we should expect to see CGI gain in value to about $13.50 to $14 by February/March of next year.
Fourthly... MY STAKE.
Yes, I do hold a relatively large stake in CGI so my opinions are biased. When your accountant, bank manager and lawyer get together to hold an "intervention" to force you to start diversifying you know you're in too deep.
Regards,
Serge (the other one)