Revisiting the Tech Stock/Subprime Connection

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Includes: ADBE, BEAS, BMC, BOBJ, CA, CHKP, CRM, CTXS, CVLT, INFA, MFE, MSFT, ORCL, QSFT, RHT, RNOW, SCUR, SYMC, TIBX, VRSN
by: Paul Kedrosky

I've been arguing for some time that tech was going to be strong since the subprime meltdown. The main arguments: minimal subprime/credit exposure, major exporters, and minimal consumer exposure. And that thesis has been playing out, with tech being a standout over the last month or so.

Now, however, let's take the other side of this trade for a moment. With Tibco (NASDAQ:TIBX)missing Wednesday night, which tech stocks are most exposed to subprime, or at least to the financial services sector, and how have those stocks done since the market trough in mid-August?

Combining data from a new Goldman Sachs report with my own numbers, here you are:

Is it any surpise that Tibco missed? I think not. And Informatica, BEA, and others need to be closely watched as well. Another one to look at is Secure Computing, which, while not at the high end of financial services exposure, has advanced a little more than 20% since August 16th.