Mentor Graphics (MENT US) was proposed as long pick in December 2012 due to its high-growth EDA business exposure, Asian exposure, competitive relative valuation to peers, latent M&A premium and mark-up power, management’s long tenure and bullish technical trading upward reversal signals. Good organic operating momentum and acquisition speculation by major shareholder, Carl Icahn, has driven the shares higher over the last 7 months. However, MENT appears to have reached a quiet accord with Carl Icahn, following three years of record sales and profits. Icahn seems no longer at a good position to convince other shareholders to accept a bid offer and it seems will diminish its activist stand on the company. As a result, short term liquidity trading signals in MENT stock seems to have reversed and latest upward moves in the shares have come along weak net buying volumes that, along with other indicators, could suggest the end of MENT rally. MENT stock has outperformed by more than 15% close peers like Cadence and Synopsis as well as the overall S&P 500. MENT shares have almost reached 20 USD target price, for which reason and the weakening in technical indicators, it is a good time to sell the position. Disclaimer: the blog is intended to convey investment ideas and, market views , yet they are not a solicitation or recommendation to buy/sell/hold securities but merely investment ideas that should NEVER serve as the basis of the reader trading decisions. This website and its reports are for general information purposes and any investment decision should be discussed with a financial adviser before taking place. The investment ideas displayed here could have been implemented at an earlier date than the one stated at the blog's post date; for which reason the latter dates do not represent accurate and timely entry/exit points in order to protect those investors with whom the blog author has a fiduciary agreement.
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Carlos Salas
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