3SOF

Thanks for your posts 

Now I have a 28% profit in SIFY, and I don't feel pressure to take the profit. Why? Because I «know» that if SIFY goes down, REDF will probably fall 3 times more in percentage terms, so that day I will win anyway.

Hedging is cool 

I'll continue holding SIFY.

There were some news just before the close on SIFY:

«Item 1.01. Entry into a Material Definitive Agreement.
On December 20, 2005, Sify Limited ("Sify") entered into a Shareholders' Agreement (the "Agreement") with Infinity Satcom Universal (P) Limited ("Infinity Satcom") and Safescrypt Limited, a wholly owned subsidiary of Sify ("Safescrypt"). Pursuant to the Agreement, Sify will sell 4,680,000 shares of Safescrypt's capital stock, representing a 26% equity interest in Safescrypt, to Infinity for approximately $3.1 million in cash. In addition, Sify will transfer its virtual private network services business to Safescrypt (the "VPN Services Transfer") at a valuation of approximately $11.1 million. The valuation was arrived at based on third party appraiser's opinion. Sify's audit committee approved the VPN Services Transfer.

Infinity Satcom is owned by Anand Raju, who is the brother of Raju Vegesna. Raju Vegesna is the Chairman of Sify's Board of Directors and the principal of Infinity Capital Ventures, LP ("Infinity Capital"). Infinity Capital owns approximately 32% of Sify's outstanding equity shares and, upon the terms and subject to the conditions set forth in a Subscription Agreement dated November 10, 2005 (the "Subscription Agreement") with Sify, may purchase additional equity shares or ADSs from Sify.

The foregoing description of the Agreement is qualified in its entirety to the full text of the Agreement, which is attached hereto as Exhibit 99.1.

Item 8.01. Other Events.
At the extraordinary general meeting held on December 23, 2005, Sify's stockholders approved (i) an increase in Sify's authorized capital to Rs. 500 million divided into 50,000,000 equity shares of Rs. 10 each and a related change to Sify's Memorandum of Association, (ii) the issuance of up to 11,700,000 equity shares, ADSs or other securities and (iii) the VPN Services Transfer. Of the securities approved for issuance, it is expected that Sify will issue 6,720,260 ADSs to Infinity Capital pursuant to the Subscription Agreement.»

This news means dilution. I really don't like dilution.

I'll take profits on SIFY around today's open.

I'll be looking to buyback shares at TL2 on the chart below.

The trading plan is:

1) Take profits on SIFY around today's open;
2) Buy it back at TL2, which today stands at $8.52

Looks like SIFY took a hit. Do you see this as a buying op or is the news going to keep this down for a while? Trading under 10 right now.

In the past I bought SIFY at $8.93 and sold at $11.33 for a 27% profit. Fundamentally nothing has changed (fundamentals continued to improve and the company is now cash flow positive) and SIFY is trading around $9, exactly at its long term support level.

If I ever wanted to get back into SIFY, this seems to be the right time.

That's what I'll do, buying 10% of the Stocks on Fire Portfolio capital around today's open.

(more in depth analysis on the first update)

David,

I know you probably bought SIFY (up 7.14% on high AH's volume - 99,094) today even it's not showing under 3SOF Portfolio.

I followed your recommendation and bought at $9.14. Although we had a spike in AM the stock couldn't hold at those levels. I was worried because SIFY not only got below the $8.85 low of 1/18/06, but also the $8.83 low of 12/14/05, and closed above both those lows on very light volume. And for sure I didn't like a close in the teens, bellow the 50 MA.

But the intresting thing happened in AH when Cramer recommended REDF in his show (up 19% in AH). He said REDF is not only the Indian version of Yahoo! but may be the Indian Google  .  Although I disagree with his opinion on REDF  I have to admit that anything in India is on fire right now, in addition to raised interest rates, which should weigh on its stocks.


Anyways, since we had both stocks in the portfolio and know that SIFY is the better one, I assume it makes sense to see this rise in the afterhours as a carryover from those doing their homework.

Let's see what tomorrow brings............

Quote from: Jimbo on January 24, 2006, 11:37:28 PM
David,

I know you probably bought SIFY (up 7.14% on high AH's volume - 99,094) today even it's not showing under 3SOF Portfolio.

I followed your recommendation and bought at $9.14. Although we had a spike in AM the stock couldn't hold at those levels. I was worried because SIFY not only got below the $8.85 low of 1/18/06, but also the $8.83 low of 12/14/05, and closed above both those lows on very light volume. And for sure I didn't like a close in the teens, bellow the 50 MA.

But the intresting thing happened in AH when Cramer recommended REDF in his show (up 19% in AH). He said REDF is not only the Indian version of Yahoo! but may be the Indian Google  .  Although I disagree with his opinion on REDF  I have to admit that anything in India is on fire right now, in addition to raised interest rates, which should weigh on its stocks.

Anyways, since we had both stocks in the portfolio and know that SIFY is the better one, I assume it makes sense to see this rise in the afterhours as a carryover from those doing their homework.

Let's see what tomorrow brings............

Thanks for the info Jimbo 

It looks like Cramer gave us a gift, great  Actually, as I was doing some more DD, I was getting some doubts on this SIFY trade. So I welcome Cramer's recommendation and sell into it.

But not right at the open, just at the $10.27-$10.32 gap (about a 14% rise from yesterday's closing price). I will also sell REDF short if I have the chance, around $18.60 (throwback to the neckline - a 23% rise).

I see this recommendation from Cramer as a chance to obtain a profit on my SIFY trade, which was already showing a loss and a chance to short REDF again at an attractive price.

I don't go with statements like «this is India's Google» anymore.

WOW! REDF is at $20  .....it's a shame my broker, E-Trade, won't let me short it. They say they don't have any shares to borrow.  Anyone else having this issue?

Quote from: bocasva on January 25, 2006, 09:37:52 AM
WOW! REDF is at $20  .....it's a shame my broker, E-Trade, won't let me short it. They say they don't have any shares to borrow.  Anyone else having this issue?

I was able to sell it short right at the open, maybe a bit early ... also sold SIFY at $10.30.

Maybe if you call E*Trade ... this is insane, this stock isn't worth this at all.

Boc - be thankful your broker has no shares to short. 15 minutes into the day and volume is already its highest of the year. You don't want to short this beast right now!

Hey bocasva,

call your broker - with this kind of volume they should be able to find you some shares 

I use Scottrade - no problem 

BTW I was expecting gap up but is too much 

Quote from: Jimbo on January 25, 2006, 09:58:55 AM
Hey bocasva,

call your broker - with this kind of volume they should be able to find you some shares 

I use Scottrade - no problem 

BTW I was expecting gap up but is too much 

I called Etrade Premium customer service and they said the same thing, that they are unable to borrow shares either from in-house or outside.  Not sure what to make of this, but it sure makes me want to switch brokers.  No problem, I wish you good luck all.

Good short term play. Two days gained a lot.

If we have the same strategy for INSM, we would be up 20% on that stock in one day..

In agreement REDF is a good short play, in spite of the Cramer Gap today.

Apparently, David and I are not the only one's of that opinion:

http://www.thestreet.com/_yahoo/tech/internet/10264068.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Why I'm Short Rediff

By Doug Kass
Street Insight Contributor
1/25/2006 2:54 PM EST
Click here for more stories by Doug Kass


Editor's Note: This column by Doug Kass is a special bonus for TheStreet.com and RealMoney readers. It first appeared on Street Insight at 2:04 p.m. EST. To sign up for Street Insight, where you can read Kass' commentary in real time, please click here.


Jim "El Capitan" Cramer writes about Rediff.com (REDF:Nasdaq ADR - commentary - research - Cramer's Take), a company that he mentioned on "Mad Money" last evening.

Today, the shares are more than 35% higher based on Jimmy's bullish comments on the company last evening in which he forecast that it would rise to $20 in the next few months. It did that this morning! I view REDF with less enthusiasm than my pal does and I will have some more detailed thought on REDF over the next few days.

In a recent piece, I suggested that some of "Mad Money's" viewers get caught up in the moment and bid -- with Internet speed -- some of his recommendations to absurd levels. (Jimmy justifiably ridicules such aggressive after-market buying in his column!) From my perch, REDF is a clear example of this giddiness, and I have taken a short rental (short-term long) in the name as I believe it will retreat right back into the midteens over the next few weeks.

REDF is an unprofitable company with about 200 employees. The company publishes two newspapers and provides online information on shopping, entertainment -- oh yes and matchmaking and cricket! In addition, REDF provides a chat and messaging service in India. The company's annual revenues are less than $15 million -- down 30% from 2003 -- and the company has never been profitable. In this writer's opinion, comparisons of REDF to Google (GOOG:Nasdaq - commentary - research - Cramer's Take) and Yahoo! (YHOO:Nasdaq - commentary - research - Cramer's Take) fall ... ahem, quite a bit short! More to come.

SIFY up in After Hours (RT-ECN): 12.69  1.91 (17.72%), Volume 116,640   

February 03, 2006 16:59 ET (21:59 GMT) :

DJ India Sify CEO: Expects First Ever Profit In Fiscal 4Q

    By Claudia Assis
    Of DOW JONES NEWSWIRES
     
  NEW YORK (Dow Jones)--Indian Internet service provider Sify Ltd. (SIFY) expects to turn a profit in its fiscal fourth quarter in what would be the company's first positive result since its inception in 1995, Chief Executive Officer R. Ramaraj said Friday.
  What gives Ramaraj hope is that the fourth quarter, which ends in March for Indian firms, is usually the busiest time of the year for Internet companies. Sify also pared its losses recently, he said.
  "We are very close to profitability," Ramaraj told Dow Jones Newswires in an interview.
  In the fiscal third quarter ended in December, Sify trimmed its losses to $230,000, compared to a net loss of $2.11 million in the same quarter of 2004. The company posted a net loss of $1.4 million in the fiscal second quarter that ran from June to September 2005.
  According to Ramaraj, the January to March quarter is busy for Sify's business because many Indian companies try to use up money on their budgets before the end of the fiscal year. For operations related to its individual consumers, February and March are the months when scores of young Indians apply for college and take mock examinations on the Internet, increasing traffic and thus advertising revenue, he said.
  Sify is following in the footsteps of Time Warner Inc.'s (TWX) AOL in providing means to access the Web as well as content, Ramaraj noted.
  The company, which is listed in the U.S. but not in India, also owns 3,100 cyber cafes in 150 cities across the South Asian country, while its closest competitor owns about 240 Internet cafes. Sify also offers information technology monitoring and maintenance services for local and overseas businesses.
  About 45% of Sify's revenue comes from individual consumers, with the remaining 55% from companies, Ramaraj said.
  Despite its lack of profits, Sify is riding a wave of interest for Indian Internet companies, fueled by forecasts of a fourfold growth in Internet usage in that country.
  Estimates vary on how many Indians have regular access to the Internet, but some put that number at 25 million people in a country of more than one billion. According to a report by trade group Internet and Mobile Association of India, the country will have 100 million Internet users by 2007-08.
  Market potential in India is just behind China's, said Ramaraj. The Indian Internet market may mirror the wireless phone business, which took off a little after China but is growing at the same fast pace since, Ramaraj noted.
  "These are exciting times for growth," he said.
  Sify intends to take advantage of its unique position as a connectivity as well as a content provider, Ramaraj said. It also fends off competitors, which include Yahoo Inc. (YHOO)'s India unit and Google (GOOG), with a better understanding of the local market and being first in the Internet business segment, he added.
  The company provides e-mail services in nine regional languages and content in five of India's main languages, Ramaraj pointed out. Sify also provides broadband services, allowing for forays into paid music downloading, movie clips from Bollywood - as India's film industry is known, and interactive scorecards for cricket matches.
  "What we have been doing is betting on broadband and betting on the young," Ramaraj said. About half of India's population is in the working age group.
  Ramaraj said that local rivals such as Rediff.com (REDF) will also eventually enter the broadband business, but "we've got the head start at the moment."
  Sify also plans to seek more business clients overseas in the next fiscal year, which starts in April. The company currently has six clients abroad, for whom it oversees data centers and servers, among other applications. Ramaraj expects to add to the list shortly.
  "That's a segment that is going to grow very fast ... it is the next wave of off-shoring," said Ramaraj, but declined to provide guidance on how many new clients Sify expects in the 2006-07 fiscal year. He said, however, that most new clients would come from the U.S.
  Sify, headquartered in Madras, was up 1.1% at $10.78 at around 4:40 p.m. EST Friday. The stock's 52-week high was $12.35, while its 52-week low was $3.81.