On 15 November 2017 the purchased shares have been sold at USD 98.78 due to reaching the stop loss limit. The realised profit over two weeks before any taxes and fees is 2.38%.
On 6 November 2017 the long position has been closed at USD 55.78. The realised return over one week before any taxes and fees is 1.60%.
On 30 October 2017 long position has been opened in Merck stock at USD 54.9. The main reason of the opportunistic investment was the douple digit decline in the otherwise quality stock.
On 27 October 2017 long position has been opened at USD 96.48 in Celgene. The global biopharmaceutical corporation formed a positive mid-term outlook: the USD 13 bn estimated revenue for 2017 is projected to grow by 14.5% CAGR to reach USD 19-20 bn by 2020.
The key issue was that this revised guideance is lower compared to the previous one, therefore the shares have plunged from an all time high above USD 145 to below USD 100 recently. The current trade idea is a bet on the feeling that the market probably overreacted the story and the company can offer significant upside in the future.
Let me draw your attention to a recent corporate story caused by a massive data breach which easily can be a decent case study for business schools and tech universities as well. Equifax is a consumer data reporting agency aggregating info about more than 800 million individual and over 80 million businesses globally.
In September 2017, the company announced a cyber-security breach between May and July 2017, where cybercriminals gained access to appr. 140 million U.S. Equifax consumers’ personal data. This hack was one of the largest and most descructive data breach in world history. Needless to say, the recent sale of appr. 2 million stock by top executives didn’t help to handle the situation and might easily be the of the most disadvantageous timing of an insider activity ever occured.
Historical share price performance of Equifax (USD), source: Yahoo Finance
Despite these numerous drawbacks the company’s cash rich profile with stable historical growth still offers a good entry point with high risk. On 15 September 2017 long position has been opened at USD 91.4.
On 31 May 2017 the long position in TSCO has been closed at USD 54.02 due to reaching the stop loss level. The realized 1-week profit before any taxes and fees is 1.92%.
As we all know from Ocean’s trilogy, playing a story once again is probably not the best. In case of Tractor Supply Co. this feeling has been underlined by different segment and company specific factors as well:
- The outlook of the classic US retail players have been weakened mainly due to the increasing dominance of e-commerce business models. Year-to-date number on retail store closures is already outpacing that of 2008 (year of latest recession in the States) and appr. 2,880 have been announced so far this year according to Credit Suisse.
- TSCO’s share price dropped significantly and its valuation (and its expected dividend yield) is far more expensive compared to its peers.
Historical share price performance of Tractor Supply Company, source: Yahoo Finance
On the other hand the low-debt company could offer some locked in potential. Based on the analysts’ consensus the long-term growth prospects remain roboust despite the disappointing quarterly performance and the 12m projected share price might offer more than 20% return.
Considering all these pros and cons a new long position in TSCO has been opened at USD 53 on 24 May 2017.