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Goldman out with a bearish call on three "human capital management" companies in the red-hot Software-As-A-Service (SaaS) market: Kenexa (KNXA), SuccessFactors (SFSF), and Taleo (TLEO). The bottom line? Too expensive, too competitive, and deteriorating environment for enterprise spending:
Still, Goldman can't resist recommending a pair trade: long Kenexa, which has been battered to 1.7x EV/2007 sales by a whiffed quarter (a problem with one client, Goldman believes), and short the popular "best of breed" Taleo, which is trading at 5.2X sales. Goldman believes such a trade neutralizes the macro exposure.
Sounds logical, but we would add the following: In our experience, it's hard to count the number of folks who have blown themselves up shorting "expensive" tech stocks or died waiting for "value" tech stocks to recover.
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