CA Shares Remain Attractive but Bad Acquisition Is Frustrating

CA Technologies is a software and services company that trades at less than 8 times forward free cash flow. CA recently announced that it bought a cloud computing company for $330 million, or more than 8 times revenue.

CA's shareholder base consists of value investors. Three out of the top five institutional holders are value shops during the other two are index funds. Value investors do not want their money spent on cloud computing companies at eight times revenue. This is a slap in the face to CA's major shareholder base.