Ol’ Man River(bed)

Ol’ Man River, that Ol’ Man River
He must know somepin’, but he don’t say nothin’
He just keeps rollin’, he keeps on rollin’ along (Show Boat)

We are not big fans of Broadway musicals...our lowbrow tastes run more toward train wrecks than paddlewheel steamers.

The Street was split on the prospects for Riverbed Technologies (RVBD-NASDAQ) last we checked in. But Ol’ Riverbed just keeps rolling along...Indeed, the stock has offered up a pot of riches. It is arguably the most successful deal of 2006, given the 240% rise in the shares since its IPO a scant 51 trading days ago.

But it seems the good ship Riverbed has attracted naysayers as well. The rise in the short interest could mean we have stumbled upon the next installment in our Battleground Stox series. Not much of a contest thus far; the bears buttocks have been firmly paddled. No doubt they are skeptical about Riverbed’s valuation, which seems mighty rich to us too.

But shorting a stock purely on valuation is an iffy proposition at best.  Hopefully, for the shorts, the bear case includes more than a valuation call. Perhaps they are counting on a follow-on offering to finally throw a little cold water on this red hot stock. We should note that more than 5% of the float changes hands every day...and the ample liquidity should offer opportunities for the shorts to jump ship. Certainly some already have.

Still, the SS Riverbed is chock-a-block full of riverboat gamblers warily eyeing one other across a poker table.

The question is, who will blink first?

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