DIVX (DivX Inc)

After coming public in September at $16.00 the stock doubled in 3 months time. Since early December, the stock has been settling down and giving back some of its excesses. It now is at a spot it looks good for a trade as it bounces off the $20 area where it first started trading.

Software has been a hot area and DIVX has strong sales and earnings growth trends quarter to quarter. They are definitely not cheap but it is hard to value a company that is growing earnings quickly and coming from a background where they are only recently profitable.

I expect the stock to get some momentum as managers see that the downtrend is likely complete and that should fuel some institutional buying in this name. The market will be a key factor as a weak overall market will punish risk takers. If we get distribution on the NASDAQ especially, i will be hesitant to hold the stock.

Feb 6, 2007

DIVX has traded up very nicely from its low and yesterday it crossed $24.00. The overall market was very slow and just felt a bit heavy so I decided i might as well take 1/2 of the position off and book some nice profits. I'm still bullish on the name but i wonder if the 50 day average will give any resistance. So I continue to be long but now have a realized gain to go along with my unrealized paper profits.

Feb 10, 2007

This week has been pretty busy so I apoligize that i am just now posting on this name. I was unconfinced that DIVX had much room to run at this time and since it was a short-term trade, and I had some growing concerns on the overall market, I went ahead and sold the rest of my position Wednesday at $23.34 to close the trade with a decent profit.