Buy Alert: May 8, 2013

| May 8, 2013

Buy Alert:  May 8, 2013

 

Trade Details

Buy Fusion-io (FIO) June 2013 $14 Calls for $1.35 or better

 

Why?

FIO, a developer of storage memory platforms, is plunging after the company announced two founders, including the CEO, are leaving the company.  Investors don’t like to see such dramatic changes in a company that’s only been public since June 2011.

However, new FIO management said the two leaving has nothing to do with anything related to financial statements or accounting policies.   In fact, the company’s fiscal year 2013 guidance remained in line with expectations.  Instead, the founders supposedly quit to pursue entrepreneurial activities.

Most likely, management disagreed on what direction the company should take.  After all, the stock has had a rough year and is well off its 52-week highs.  Nevertheless, FIO has several key customers including Facebook (FB) and Apple (AAPL).  And, the company is sitting on $355 million in cash.

This is a company with many options on how to move forward.  As such, I believe the selling is overdone and investors are overreacting to the founders’ departure.

I’m looking for a bounce back in FIO in roughly the next month or so.  Let’s grab the June $14 calls.

 

Recent Activity

Fusion-io

 

Category: OTW Buy Alerts