Premium Post: An Insider Purchase At A Beaten Down Retailer

With the last four premium posts focused on merger arbitrage opportunities, I figured I would shift my attention to some of the other event-driven strategies that Inside Arbitrage offers and discuss an insider purchase that caught my attention this week. A few days ago, a beaten down retailer showed up on a screen I was running and I was shocked by how much it had dropped over the last year and how cheap it looked using most valuation metrics. To top it off, it was also paying a dividend of over 9%. The yield is now 8.75% after the stock appreciated this week.

I started wondering if this was yet another value trap or a company that had gotten thrown out with the retail bathwater. Was this another struggling debt-laden retailer with declining revenue and declining same store sales that hadn’t quite figured out the mixed retail environment that we find ourselves in where both the online channel and a physical presence are  important? Or was it a company that had kicked its erstwhile charismatic founder to the curb and had leveraged itself to buy another retailer?

Please subscribe for free or login to your InsideArbitrage account to access this article.