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Cyber Security Revisited

In December I pointed out cyber security firm Vasco Cyber Security VDSI and scratched my head as it certainly seemed to these eyes seems one that is pumped up in a scramble for yield and then plummet as markets experienced mean reversion after 2000  and 2007.  As we all know from experience, parabolic moves, very often correct violently.  On a 10 year monthly chart, VDSI certainly seemed parabolic.

They target banks and financial services customers.  After JPM, Visa and Mastercard were all hacked the last few years, is there trouble in paradise?  Did this laggard deserve the run up?

Historically it generally traded very thin, under 100k shares per day but suddenly in 2014, volume ramped up and traders were piling in.  Was a laggard being pumped?  "Who doesn't love cyber security?  Let's buy them all." but are all cyber security firms alike?  Shares of rivals FTNT, PANW and PFPT have performed better while FEYE has lagged while CUDA has seen recent weakness.  Why the sudden interest in VDSI in 2014?  A pump/dump?  Yes their earnings were expected to jump but was 40+ p/e a tad expensive?  What about sales impact vs. the strong dollar?  Again, I remember how it topped out ahead of the last two bear markets. 

Merely for kicks and giggles, I shorted it merely b/c I felt it was parabolic and seemed to be struggling even with the $30 price target set by the street.  

Looking at the cyber security ETF $HACK now, which only launched in November, one wonders if the recent weakness is spreading.

Well lookee here at VDSI now.  How interesting.  Sometimes history repeats and some times you just get lucky.

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