The stock traded 90mm shares today. there are only 220mm shares outstanding. PS own ~40mm of them.
The stock fell ~12%.
That isn't surprising given the recent pounding. Bad news already baked in there.
Most of the volume was earlier in the day and tailed off. I expect it to be heavy tomorrow. People will have taken liquidity in the stock.
If there is a bigger seller out, they will have backed off when the price gave way.
The fundamentals are awful. Chatter today of further sales decline.
Ron Johnson leaving and being replaced by the old CEO Ullman. Although "news" this isn't really new information/insight.
The last few quarters have shown that RJ's strategy was floundering, he didn't have the humility to understand or accept that. His loudest cheer leader has thrown him under the bus.
I'm not saying it can't ever happen, I just don't think it will. I don't think this is a firm that is going to get bought out. Too much risk, not room to leverage the balance sheet (if you were mad enough to want to put financial leverage onto a recovery story that has a tonne of operational leverage at this point).
Why pay a premium to get control?
Showing posts with label Ackman. Show all posts
Showing posts with label Ackman. Show all posts
Tuesday, 9 April 2013
Thursday, 28 February 2013
Herbalife
$HLF +7.5%.
$JCP is -17% today.
Ackman is short the former and long the latter.
Zerohedge blogged Ackman's position list according to his 13F filing.
If I were Bill Ackman's, I would be bricking it.
JCP's move is fundamental. The company's results were very poor.
It seems as if the superstar manager that Ackman spent so much time praising suffers from the same blindspots as he does. Massive overconfidence and an apparent unwillingness to change course even when data and events contradict their model of the world.
As a manager this is bad. As an investor this is lethal.
The biggest and most dramatic blow ups occur when overconfidence and a stubborn reluctance to change your view meet the market.
The market is telling Mr. Ackman he is wrong.
You can't change your mind every time a position ticks against you, but there should always be a fixed regular periods in both price and time that one re-evaluates the investment thesis. Buying a stock that falls 25% before it begins to rise, is not "early", it is wrong. And looking at Ackman's investment record it appears he's made plenty of mistakes, yet seems to leave himself no room for error.
Being a concentrated investor has its merits, however if you are shorting and using leverage then that concentration becomes a weakness. Other traders and investors are now talking about what he holds, that is chilling.
I've bought Herbalife today, because I think he is wrong, the chart looks good and it makes a lot of sense that other investors begin to see that too.
The more noise and adverse price action he faces the tougher his position becomes and the more likely he is to face redemption requests and be forced to liquidate.
Time to buckle up, it's about to get bumpy.
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