Chasing & Understanding Volatility: Sify’s Wild Move (SIFY)

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By Jon C. Ogg Published
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CIA World Factbook
Securities that rise more than 10% in a day, like shares of Sify Technologies Limited (NASDAQ: SIFY) did Friday and have done today, can easily fall more than 10% in a day.  Such was the downside story for Sify on May, 16th, June 6th and July 21st.

It doesn’t take a market guru to figure out that the right companies in India a will be great holds over the long haul.  The trick is to buy them when they aren’t the runaway-of-the-day.

The Indian provider of business and consumer Internet services, rocketed upward on Friday after releasing favorable second-quarter results.  Revenues rose 31% from a year ago to $50.7 million.  Its EBITDA net soared to $2.8 million versus $510,000 a year earlier. The company reduced its net loss to $1.91 million from $4.05 million for the prior year.  Impressive.  Nonetheless, one buys these shares on their story, once one has made the effort to learn their story, not on their valuation.

Even if Sify is one of the better companies in India (we wouldn’t argue that it is not) it is still in the stage of development where it is not posting profits.  It is narrowing losses.

The 9.6% gain to $5.37 today compares to a 52-week range of $1.19 to $8.54.  Shares were challenging $4.00 just last Thursday, but this ADR was also north of $6.00 as recently as July 20 and this was trading at $10.00 back at the end of 2006.  Just keep in mind that the shares also have been bouncing around in a $4.00 to $6.00 range since mid-May.

Jim Berdou

Contact [email protected] for any questions or corrections.

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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