Thursday, March 08, 2007

Hit #152 (SafeNet)

SafeNet (SFNT) is being acquired by Vector Capital in a $634 million buyout. The cash offer of $28.75 gives me a 37.9% gain over my average cost of $20.85.

I had bought SafeNet after it had pulled back following options related investigations. I had mentioned in this post that it had become attractively valued.

Given the depressed price to start with, the company is going for a bargain. Shareholders deserve better, and the former executives deserve long prison sentences - if only it worked that way!

I would also have expected some strategic buyer to show interest. In my posts (here and here) I had speculated on possible larger corporate buyers. There may yet be a counter-offer. And hopefully this one won't insult shareholders.

Other targets mentioned in my earlier posts, Websense (WBSN), Secure Computing (SCUR), Aladdin (ALDN) and Blue Coat Security (BCSI) have all moved up considerably over the last few months. Aladdin and to a lesser extent, Websense, are still worth buying at current price levels.

But beaten down Symantec may be the best security buy now for long-term investors.

A recent IPO in the security-related sector is Guidance (GUID). Guidance will likely be acquired down the road, but during the current growth phase it could generate tremendous returns to investors before that happens.

Previous hit - Dendrite(#151)


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