We are neutral on ISS but we should note that ISS has one of the highest institutional buying among the China-based stocks. Lone Pine Capital boosted its holdings in ISS by 32% during the third quarter.
VMware (VMW) is a provider of virtualization-based cloud infrastructure. It has been given a buy rating by UBS since it is the leading company in this sector. UBS analysts expect positive catalysts for the company in 2012, such as the building of a market-leading cloud app platform and the company's involvement in the emergence of a user-computing paradigm. UBS expects VMware to install over 80 million servers by the year 2014. Shares of the company are currently trading at $87.80 per share and are expected to reach a price target of $115 by the end of 2012.
We are bullish about VMW. VMware currently has one of the highest insider purchases among its competitors, indicating that the management and owners of the company expect the company's stock valuation to increase in the near future. Its gross and operating margins of 83% and 18% respectively are both higher than the industry averages of 39% and 7.8%. This indicates that the company is highly profitable. John Burbank's Passport Capital initiated a brand new position in VMW during the third quarter.
Aruba Networks (ARUN) is a provider of network access solutions for mobile enterprises. UBS has given the company a buy rating. The company significantly benefits from 100% customer loyalty, apparent from the increased size and frequency of purchases by Aruba customers. UBS considers this to be a competitive advantage for the company. UBS analysts consider Aruba Networks to be a secular share gainer with a potential for better performance. Shares of the company are currently trading at $21.8 per share and are expected to reach a price target of $30.We are long-term bullish about Aruba as well. Aruba Networks reported a growth of more than 20% in the last five years and has experienced a rise in insider trading over the last six months. Despite the company's negative operating margin, the company's management has been handling its inventory quite well. It is also doing better than its competitors such as Hewlett-Packard (HPQ) and Motorola Solutions (MSI), in terms of significant increases in quarterly revenue growth and higher gross margins. Panayotis "Takis" Sparaggis' Alkeon Capital is the most bullish hedge fund about ARUN.
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